Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

COUNTY OF KENT BILL [Lords]

GREATER LONDON COUNCIL (MONEY) BILL

As amended, considered; to be read the Third time.

MILFORD DOCKS BILL [Lords]

Read a Second time and committed.

Oral Answers to Questions — ENERGY

Alternative Sources of Energy

Mr. Knox: asked the Secretary of State for Energy what discussions he proposes to have with the European Economic Community Council of Ministers about alternative sources of energy.

The Under-Secretary of State for Energy (Mr. John Moore): I hope that there will be an opportunity to discuss at the next Energy Council the Commission's proposals for increasing the funding of the present Community demonstration programme for alternative sources of energy.

Mr. Knox: I congratulate my hon. Friend on the progress made in this sphere, but is he satisfied that enough is being done in research into alternative sources of energy? Could not a major initiative be taken in this area while we have the Presidency of the Council of Energy Ministers?

Mr. Moore: One is never satisfied, but the Community is currently reviewing the status of the five-year demonstration programme with a view to seeing whether it might be increased. I shall take note of my hon. Friend's comments in that regard.

Mr. John H. Osborn: Can the Minister say what will happen to the wave power programme? Is it part of the Community's activities?

Mr. Moore: There are two aspects of Community activities—the research and development programme and the demonstration programme. I was referring particularly to the demonstration programme. As Britain has a very large part of the Community's wave programme, we stand to benefit from the research and development side of that research budget.

Mr. Palmer: Will the hon. Gentleman say whether it is the Government's intention to stop research on the wave programme in this country?

Mr. Moore: That is not specifically related to the question. But the Government have, quite correctly, made it clear they will, at all stages of research and development programmes, continue to keep them under review. That policy has in no way changed.

Electricity Supplies (Faulty Wiring)

Mr. Thomas Cox: asked the Secretary of State for Energy if he will place a statutory obligation on the electricity boards to investigate any cases reported to them of suspected faulty wiring without any charge being imposed.

The Under-Secretary of State for Energy (Mr. Norman Lamont): No, Sir. Wiring installations on their side of the meter are the property and responsibility of


consumers. Area electricity boards offer a comprehensive service to consumers whose wiring may need attention, but there is no reason for this to be provided free of charge.

Mr. Cox: Is the hon. Gentleman aware that that is a most disappointing reply and also a stupid reply? Is he aware that the gas boards will freely investigate any possible gas leaks, and that there may be just as much danger from faulty electrical wiring? Will he reconsider the matter, as the problem causes enormous worry to many people?

Mr. Lamont: I do not agree with the hon. Gentleman. When people's homes are first connected to the electricity supply they are entitled to a free inspection of their wiring. Thereafter, in their own houses, the condition of the wiring ought to be people's own responsibility. The hon. Gentleman's suggestion would involve a considerable charge on other consumers and on the taxpayers. Even one inspection every five years, at £30—the present cost for a domestic test—would cost the boards £120 million a year. I cannot see that the suggestion is justified.

Mr. Viggers: Does my hon. Friend agree that, although we are all concerned about safety, if the suggestion of the hon. Member for Tooting (Mr. Cox) were to be followed it would lead to the most appalling snoopers' charter?

Mr. Lamont: I entirely agree with my hon. Friend.

Oil Supplies

Mr. Chapman: asked the Secretary of State for Energy if he will make a statement on the latest assessment of prospects for new discoveries of oil whether on land in the United Kingdom or beneath the continental shelf.

The Minister of State, Department of Energy (Mr. Hamish Gray): My right hon. Friend's report to Parliament on the development of the oil and gas resources of the United Kingdom in 1981 estimated future finds at between 775 million and 1,775 million tonnes. Until much more exploration has taken place it is not possible to assess the possible oil-bearing potential of the United Kingdom onshore areas.

Mr. Chapman: How much of that increase is due to on-land discoveries rather than to discoveries beneath the continental shelf? Will my hon. Friend give an assurance that the on-land discoveries made so far will pose no major environmental problem?

Mr. Gray: I cannot give my hon. Friend the onshore figures. There has not yet been sufficient exploration carried out to assess the potential. I can, however, say that since coming to office the Government have issued 57 new exploration licences permitting geological exploration work and 19 new production licences onshore. In regard to environmental hazards, I can confirm that all applications are subject to normal planning controls and are carefully monitored.

Mr. Penhaligon: Is the Minister aware that over the past five or six years my part of the country has been speculating constantly about the great oil exploration boom that is about to hit the South-West? To date, little seems to have happened. Does the Minister believe that anything ever will happen, and can he predict when it will start?

Mr. Gray: The hon. Gentleman will be aware that blocks have been offered in the Channel and the Western Approaches. There has been enthusiasm from the companies. There is also onshore interest in that part of the country, but the possibilities will depend on geological factors now being explored.

Mr. Gordon Wilson: I accept that exploration is necessary, but does the Minister accept that the current and medium-term problem will be over-production? Will he confirm or deny reports in the Financial Times today that the Government are at last considering a real depletion policy?

Mr. Gray: I take issue with the hon. Gentleman when he refers to a real depletion policy. The Government announced their depletion policy a year ago. They have been following this policy carefully, to such purpose that, for example, the amount of wasteful gas flaring in the North Sea has been reduced by 50 per cent. since 1979. Another aspect of the depletion policy involved a delay of two years on the Clyde field. The Government's depletion policy is working satisfactorily and will, we hope, continue to do so.

Mr. Patrick McNair-Wilson: Is my hon. Friend aware that last Friday, three days before the Hampshire county council was due to discuss the application of Shell (U.K.) Exploration and Production to drill in the New Forest, the Secretary of State for the Environment called in the application for consideration, following a public local inquiry? Can my hon. Friend tell the House whether that decision marks a determination by the Government to strike an overall balance between the nation's energy requirements and the environmental considerations, which must be significant in an area such as that which I represent, particularly in the context of onshore exploration for oil, gas and coal.

Mr. Gray: My hon. Friend will appreciate that this is a matter for my right hon. Friend the Secretary of State for the Environment. It confirms the Government's determination to give full and fair consideration to all the aspects which govern such a decision.

Mr. Rowlands: If, as the Minister says, the Government do not possess an accurate assessment of onshore oil possibilities and reserves, how can an accurate evaluation be placed on Wytch Farm? Will the Minister reconsider the Government's intention to pursue the hasty sale of this important oilfield, in the light of the fact that the full exploration possibilities at the Wytch Farm field are not even known?

Mr. Gray: Wytch Farm is one of the exceptions to the rule. Oil has been found. It is possible to make an accurate assessment. Normal commercial values will place a valuation on the field.

Energy Prices

Mr. Cadbury: asked the Secretary of State for Energy what recent representations he has received about the level of energy prices to industry.

The Secretary of State for Energy (Mr. David Howell): I continue to receive representations mainly from large energy users in energy-intensive sectors of industry, and their trade associations.

Mr. Cadbury: Is my hon. Friend aware that intensive energy users, particularly the steel industry, are still paying 25 to 30 per cent. more for electricity than their competitors in Europe? I recognise that, in the long run, cheaper electricity will come only as we bring our nuclear power stations on stream, but is my right hon. Friend prepared, in the short term, to exert his influence on the Electricity Council to bring about further concessions on bulk supply to intensive energy users?

Mr. Howell: My hon. Friend is right in saying that, in the longer term, the way to cheaper electricity lies through cheaper coal and more nuclear power. In the meantime, about 160 consumers, representing 25 per cent. of total electricity consumption in England and Wales, have benefited from the additional price flexibility introduced by the electricity area boards after the Budget. I recognise that this does not close the biggest gaps identified in the NEDC report at the beginning of the year, but to do so would mean selling electricity at well below even the variable cost of production. That would require a subsidy. I have to put it to my hon. Friend that that is what he requests.
In the meantime, the electricity supply industry is reviewing the bulk supply tariff. That review will come forward in the autumn. It is the longer-term problem that we have to overcome in the way I have described.

Mr. Rowlands: Did not the Secretary of State come back empty-handed from the recent meeting of the International Energy Agency, where none of his European colleagues was willing to follow him down the path of a purist energy pricing policy for industry? Is it not therefore true that over the past 12 months the right hon. Gentleman has consistently penalised British industry, particularly chemicals, steel and other high energy users, leading to losses of jobs and a large amount of output in those industries?

Mr. Howell: The hon. Gentleman is wrong on both points. There is a later question relating to the EEC Energy Council, on which I shall seek, Mr. Speaker, to catch your eye. The hon. Gentleman referred to the IEA meeting. There was a substantial commitment among IEA members to the principle of economic pricing. It is generally recognised that this is the sensible way to develop less oil-dependent economies. It is also recognised that the policies pursued by all member countries should reflect economic pricing and market pricing wherever possible.

Mr. Emery: In talking about variable costings will my right hon. Friend appreciate that these depend entirely on how the overhead structure of the industry is applied, and that there need not be a subsidy if one uses different accounting methods? Does he agree that Viscount Davignon, in Brussels, still considers that the British steel industry has to pay the highest electricity prices of any in Europe?

Mr. Howell: I shall take into account what my hon. Friend says. The basic problem concerns the short-run operating costs, which are now reflected closely in prices to bulk users. Bulk users' prices are down to short-run costs. To go below those short-run costs, whatever accounting practices are used, would involve a subsidy. We have to be careful before going over that boundary. It is possible that some of these matters can be sorted out in the review of the bulk supply tariff.

National Nuclear Corporation

Mr. Teddy Taylor: asked the Secretary of State for Energy if he will make a further statement on the nuclear power programme.

Mr. Mike Thomas: asked the Secretary of State for Energy what progress he is making in the appointment of a new chairman and the restructuring of the board and shareholdings of the National Nuclear Corporation.

Mr. Norman Lamont: Last week my right hon. Friend and I announced the appointment of a new chairman for the National Nuclear Corporation, the setting up of a new task force to develop design proposals for the proposed PWR, and an examination of NNC's role in regard to the financial risks involved in nuclear power station construction. These are positive steps to ensure that the nuclear power programme remains on course.

Mr. Taylor: Does my hon. Friend agree that the only realistic prospect of getting energy at a reasonable price over the next 20 years is to keep the nuclear programme on target? Can he give a clear commitment that, despite the financial problems facing the Government, the programme will go ahead as planned? In particular, can he give any indication of the Government's attitude to the fast-breeder programme?

Mr. Lamont: The Government's intention to proceed with a nuclear programme has been made clear on many occasions. We confirmed the two orders for the existing AGRs. I do not believe that the Government's commitment to nuclear power is in doubt. The Government have also stated that they wish to explore the matter of the fast-breeder reactor through international negotiations. I am afraid that we shall not be in a position to make an early announcement or, indeed, to make any announcement for some time to come.

Mr. Thomas: Are the Government satisfied that the new appointments, which are on a limited scale, resolve the restructuring of the NNC, leaving aside the question of capitalisation? Will the Minister reaffirm that the Government are impartial between the AGR and the PWR and that choices will be made on their merits as examination of the PWR proceeds? Will he also confirm that the designs to which the Heysham and Torness AGRs are to be built are based on AGR designs which, contrary to all press abuse of the nuclear programme, were built largely to cost and time?

Mr. Lamont: I am confident about our recent announcements. I am sure that Frank Gibb will be an excellent chairman of the NNC and that Walter Marshall will do an excellent job as head of the task force, which is intended to overcome some of the delays and design difficulties.
The Government will take an impartial view and examine the question of reactor choice entirely on its merits. The Heysham and Torness AGR designs are based on the designs for two other AGRs, which were built more or less to time and to cost.

Mr. Warren: Will my hon. Friend consider the value of introducing stronger contract incentive and penalty schemes for the construction of nuclear power stations, bearing in mind that time for construction often wastes money and that the sooner they are on stream the cheaper will be the electricity?

Mr. Lamont: Of course we shall consider that. My right hon. Friend the Secretary of State for Employment has been trying to work out a national site agreement. The point that my hon. Friend makes relates also to the financial risk borne by the contractors in the construction of power stations. We do not want them to work on a cost-plus basis. That is one reason why there have been tremendous over-runs in the past. I assure my hon. Friend that we are giving top priority to that matter.

Mr. Leadbitter: When may the House expect a reply to the Select Committee on Energy's report on the nuclear programme? Will the Minister comment on The Observer report of 28 June, which alleged that the design cost of the PWR at Sizewell is so fantastically high—60 per cent. higher than expected—that it has had to be reviewed?

Mr. Lamont: We hope that the response to the Select Committee will be made available before the Summer Recess. I do not wish to comment on particular press reports about the cost of the PWR. One reason why we appointed Dr. Marshall to be moderator was that we were worried about the possible over-elaboration of the design and the possible rises in costs. Nuclear power—and this applies to the PWR and the AGR—will be competitive provided that it is built more to time and to cost than it has been in the past.

Mr. Skeet: When considering building nuclear power stations will my hon. Friend make a careful study of EDF and Framatone, in France, because they seem to have their relationships correct? Could we adopt the same type of structure in the United Kingdom?

Mr. Lamont: I have on many occasions discussed the relationship between EDF and Framatone with the French supply industry. There are many differences. We remain convinced that the way forward is to make the NNC into an independent, free-standing company capable of taking on the design for whole stations. That remains the Government's objective.

Mr. Hooley: Will the Minister say whether the 15-gigawatt programme is still on, or is the PWR at Sizewell yet another one-off exercise?

Mr. Lamont: The position of the 15-gigawatt programme remains the same as when it was announced by my right hon. Friend in his statement in December 1979. Nothing has changed. The PWR at Sizewell will, if it gets the necessary planning consent, be the first station in the "station-a-year" programme that my right hon. Friend announced.

Coal Mining Capacity

Dr. Edmund Marshall: asked the Secretary of State for Energy how much of the additional finance which he has made available to the National Coal Board is earmarked for capital investment in developments to increase coal mining capacity.

Mr. John Moore: It is for the board to decide how much to invest in different kinds of project.

Dr. Marshall: Is the Minister aware that the whole future of Britain's coal-mining capacity depends upon a commitment now to long-term capital investment, such as the Thorne colliery, in my constituency? Does he accept

that the sinking of an additional shaft there will cost £15 million over five years? Will he help the NCB to take a decision to go ahead with that shaft as soon as possible?

Mr. Moore: The hon. Gentleman will be aware that specific projects are matters for the board. He will also be aware of the £240 million programme of extensive capital investment at Thorne which is, according to the board, on target and on schedule. Capital investment is a key criterion for the opportunities in the coal industry in the future. It has been provided by this and previous Governments.

Mr. Hannam: This year coal exports more than doubled from 4 million tonnes to over 10 million tonnes. Is that not evidence that opportunities exist for the coal industry, provided that production costs are kept under control? Will my hon. Friend take the opportunity to go to the NUM conference in Jersey, where the two Opposition spokesmen are spending their time, and spread that message to the delegates there?

Mr. Moore: I am looking forward to joining Mr. Gormley and his union colleagues later today, as his guest at the conference. The markets for coal depend upon coal being competitive and upon the industry controlling its costs. Mr. Gormley said this morning in his presidential address that it was not sufficient just to produce coal. He said:
We want to teach the public that the coal industry of Britain can be a safe and secure supplier of their energy needs.
That is crucial to the price control of the industry's product for future markets.

Mr. Hardy: Will the Minister make it clear that there will be no shortage of finance or consideration to ensure that the necessary development of the Belvoir coalfield goes ahead? Will he also make it clear that such financial consideration will involve modern approaches to mining, which will cause far less visual and environmental harm than many people in the area imagine?

Mr. Moore: Mining has changed radically over the past 20 or 30 years, as those involved in the industry are aware. The industry is different from the public's illusions. My right hon. Friend the Leader of the House said on 2 July that no decision on the Belvoir field had yet been taken. The substantial capital rightly invested in the past and the substantial present commitment show that capital will be invested in viable projects.

Mr. Rost: Does it help the coal industry to expand its market and get rid of its surpluses if it exports coal at a lower price than is charged to British consumers? Would it not be better to develop the British market by allowing that subsidised coal to be made available to the British consumer?

Mr. Moore: I shall draw my hon. Friend's comments about pricing policy for the domestic sale of coal to the attention of the marketing director and the full directors of the NCB.

Mr. Rowlands: Is it not more than likely that the mining investment programme for 1981–82 will be substantially cut in real terms as a result of the external financing limit arrangements? Has the Secretary of State for the Environment consulted the Secretary of State for Energy about the Belvoir inquiry, particularly about whether it should go ahead?

Mr. Moore: I do not think that within the £1,117 million EFL the £805 million capital investment in the coal industry this year is small. It represents a substantial amount of taxpayers' money. I explained the Government's position in relation to the Belvoir inquiry on Thursday last week.

British National Oil Corporation

Mr. Eggar: asked the Secretary of State for Energy if he will meet the chairman of the British National Oil Corporation to discuss the chairman's wish for legislation to privatise the corporation.

Mr. Gray: I keep in regular touch with the chairman of the British National Oil Corporation. The Government have made clear their intention of reintroducing the Petroleum and Continental Shelf Bill as a high priority in the next Session.

Mr. Eggar: Can my hon. Friend go slightly further and give a categorical assurance that legislation will be introduced at the beginning of next Session? Can he confirm that the chairman of the BNOC is in full agreement with the privatisation powers in the Bill?

Mr. Gray: It is not within my gift to give an absolute assurance, but I can assure my hon. Friend that the Government's intention is to introduce the Bill early next Session. The chairman of the BNOC has been fully consulted about the proposal and is in agreement with it.

Mr. Douglas: Why have the Government decided to go all the way in terms of loan capital in the future method of financing the BNOC?

Mr. Gray: The hon. Gentleman will appreciate that the Bill will merely give the Government powers. At this stage it does not spell out the particulars of how the private equity will be achieved. We are debating the principle at present.

Mr. Rowlands: Will the Minister assure us that he will not wage the nasty, vindictive campaign against the BNOC that he waged against the British Gas Corporation? Will he further assure us that he will not sell off valuable oil assets—as in the case of the BGC and Wytch Farm—belonging to the BNOC, at knockdown prices?
Will the Minister tell the chairman of the BNOC that if any oil assets are sold, in line with the Conservative Party's philosophy and policy, a future Labour Government will restore those assets to the public without any additional compensation and for not a penny more than they were sold? We shall not support such national asset stripping in any shape or form.

Mr. Gray: The House is indebted to the hon. Gentleman for spelling out so clearly the Labour Party's attitude to the measure. I have no doubt that the many private sources that are anxious to invest in the BNOC will take special note of his remarks. I assure the hon. Gentleman that private investment is to the advantage of the BNOC, so that it can make decisions on its commercial judgment and not constantly be at the mercy of the Treasury.

North Sea Gas Gathering

Mr. Douglas: asked the Secretary of State for Energy if he will report on developments in establishing the North Sea gas-gathering system in the light of discussions with his Norwegian counterparts.

Mr. Viggers: asked the Secretary of State for Energy if he will make a statement on current developments in planning the gas-gathering pipeline system.

Mr. Gray: Despite a highly competitive bid by British Gas, the Norwegian Storting has decided that gas from the Norwegian part of Statfjord and from other Norwegian fields should be transported via Norway to the Continent.
The United Kingdom gas-gathering line is highly economic on the basis of United Kingdom gas alone. The organising group is now considering the responses, that it has received from the individual companies.

Mr. Douglas: Does the Minister accept that one reason why the Storting took that decision was to enhance the petrochemical industry in Norway? In view of the recent press discussions about the possible dangers to the viability of the project for Shell and Esso at Moss Morran and Braefoot Bay, will the Minister give his view on the long-term viability of downstream petrochemical efforts in Britain? How will we finance our gas-gathering system?

Mr. Gray: The hon. Gentleman has asked a number of questions. The furtherance of the petrochemical industry in Norway was only one of a number of issues considered by the Norwegian Government. I venture to suggest that a political decision may have had a bearing on the final decision. The hon. Gentleman will appreciate that during the negotiations on a project such as Moss Morran the Department of Energy is constantly in touch with all the companies concerned. I can say no more than that at this time. The proposals put forward by companies for the financing of our gas-gathering system are currently under consideration by the organising committee.

Mr. Viggers: Does my hon. Friend agree that that vital project—the largest industrial project ever planned in Britain—will have the greater confidence of the participants if they can see that the ultimate purchaser of the gas will not be restricted to the monopoly of the British Gas Corporation and that market forces can operate in the supply of gas from that pipeline?

Mr. Gray: I confirm that the gas-gathering system has the highest priority. The Government's intention is that there should be maximum participation by the private sector. My hon. Friend will appreciate that it is a little difficult to hasten the measures when the amounts involved are of such magnitude.

Mr. Gordon Wilson: When does the Minister hope to reach a decision on this matter? Is he aware that the passage of time does not help the viability of the project? What impact will the reluctance of Esso to go ahead with Moss Morran have on the pipeline project?

Mr. Gray: We hope to reach a conclusion on the final financing of the pipeline during the summer months. I did not quite catch what the hon. Gentleman said about Moss Morran.

Mr. Gordon Wilson: What impact will Esso's reluctance to go ahead with Moss Morran have on the pipeline project?

Mr. Gray: The two are not connected. Esso has always made it clear that it wants supplementary supplies from the gas-gathering system but that the main supply will come from the flag line. That should not directly affect the negotiations at their present stage.

Mr. Rowlands: Has not another deadline been passed? Was not a statement due on 1 July about the financing of the pipeline? Is not the major handicap and obstacle not that mentioned by the hon. Member for Gosport (Mr. Viggers) but the fact that the Government are not willing to allow British Gas to go ahead with the project and give a guarantee or to give a guarantee themselves for the financing of the pipeline?

Mr. Gray: The potential of the project is such that capital can be raised in due course from private sources. The hon. Gentleman was not quite correct about the statement. The date that he mentioned—1 July—was the closing date for companies to submit their proposals to the organising group. They are presently being considered by that group.

Mr. Eggar: Will my hon. Friend confirm that it remains the Government's intention that the gas-gathering pipeline should be owned by a private sector utility? Will he assure us that the British Gas Corporation's monopoly right of purchase of North Sea gas will be removed in due course?

Mr. Gray: As I said earlier, it is the Government's intention that the major share of financing ultimately should be in the hands of the private sector. I cannot give a positive commitment on my hon. Friend's second point.

Oil-fired Boilers (Conversion)

Mr. Tom Ellis: asked the Secretary of State for Energy how many applications have so far been received under the scheme launched on 22 May for converting or replacing oil-fired boilers with coal-fired boilers.

Mr. John Moore: Questions on the operation of that scheme are chiefly a matter for my right hon. Friend the Secretary of State for Industry. I have been informed, however, that the Department of Industry has received more than 1,000 inquiries for information about the scheme.

Mr. Ellis: In view of that rather heartening response to the scheme, what are the Department's estimates of the full take-up of the grant available, and when is it likely to be fully taken up?

Mr. Moore: I cannot comment on the details. If the grant is fully taken up we expect an initial potential coal burn of 2 million tonnes per annum. Any detailed queries must be addressed to my right hon. Friend the Secretary of State for Industry.

Mr. Hardy: Will the Minister confirm that the money allotted in the Budget for that purpose may be exhausted before the period has elapsed and assure us that additional funds will be available so that all applicants can be properly considered?

Mr. Moore: It would be nice if we could first spend the money allocated before going on. My right hon. Friend the Secretary of State for Industry will review the scope and coverage of the scheme in the light of the take-up of funds available.

Energy Prices

Mr. Campbell-Savours: asked the Secretary of State for Energy what consultations he has had during the last month with leaders of British industry on energy pricing policy.

Mr. David Howell: I discussed industrial energy pricing with members of the NEDC at the June meeting.

Mr. Campbell-Savours: As the value of the Government's recent energy package for industry has been more than offset by the increased duty on derv, does not that militate against the interests of the economies of the regions, especially the Northern region? Will the Minister undertake to consult industries in the regions about his energy package?

Mr. Howell: I take every opportunity to consult industrialists in the regions and centrally on energy problems, especially on how they can make more efficient use of energy in a high-cost energy age. The price concessions for electricity and gas, which were announced in the Budget, have an effect on one group and the now reduced increase in the price of derv has an effect on another group. There is only a partial overlap. I do not think that it can be said that one offsets the other.

Mr. Budgen: Will my right hon. Friend further demonstrate his devotion to market pricing in energy by welcoming the present glut in oil and promising to make no attempt to hold up the price of oil, which would be damaging to energy consumers, especially those engaged in heavy manufacturing industry in the West Midlands?

Mr. Howell: United Kingdom crude oil prices are not determined by a Government selling price, as are crude oil prices in some oil-producing countries. United Kingdom prices are determined by commercial negotiations between producers, traders and customers. The British National Oil Corporation is much the largest trader and tends to set the pattern for United Kingdom prices. It does so by following world market trends in crude oil prices. It has done that all along.

Mr. Robert C. Brown: Does the right hon. Gentleman understand that the glass industry, which is represented by the Lemington glassworks, in my constituency, and the brick industry, which is represented by Throckley brickworks, in my constituency, are paying through the nose for gas? It is one of their biggest costs. The Government are creaming off vast sums for British Gas through the Gas Levy Act 1981. Surely we should give serious thought to making British industry more competitive with its subsidised counterparts in Europe.

Mr. Howell: I understand the problems of industries that face high energy costs. Firm gas contract prices will be about 10 per cent. lower by December. For customers on interruptible contracts, the effective benefit will be a price that is about 10 per cent. below the heavy fuel oil duty. Indeed, that is already so. These are substantial advantages. They reflect the disparities outlined in the NEDC report. They are of real benefit. The hon. Gentleman will understand that the price of gas for British industry when compared with prices in other countries may have changed since last winter. Fluctuations in exchange rates are influential factors. French industrial gas prices increased by 22 per cent. last week. These factors produce a different picture.

Mr. Henderson: Does my right hon. Friend accept that one of the reasons for the high cost of electricity is the high cost of the coal that is still used in most of our power stations? Does he agree that a substantial injection of private capital into the coal industry for new development would be greatly to the advantage of the industry and of consumers?

Mr. Howell: I accept that competitively priced coal and more nuclear power are the key to cheaper electric power in Britain. My hon. Friend is entirely right in that respect.

Coal Use

Mr. Gwilym Roberts: asked the Secretary of State for Energy what progress he has made in encouraging the increased use of coal in industry and in generation; what further steps he is taking to extend this coal usage; and if he will make a statement.

Mr. John Moore: There have so far been more than 1,000 inquiries about the £50 million coal-fired boiler scheme, which should result directly in additional coal burn building up to 2 million tonnes per annum.
In the power station market, 78 per cent. of our electricity is already generated from coal—one of the highest percentages in the industrial free world—and nearly all of it from United Kingdom coal.
Beyond this it is for the coal industry to be competitive for it to win and retain further markets.

Mr. Roberts: Will the Minister use his considerable influence with the National Coal Board and the Department of the Environment to speed up investment in the coal industry? Will he meet the additional investment by stimulating usage and by offering additional incentives for using coal in both the industrial and domestic sectors?

Mr. Moore: As Mr. Gormley said in Jersey this morning, security of supply and price competitiveness are the key to the future developed use of coal. Those are areas in which the coal industry can pursue its aim to obtain larger markets through competitively priced coal.

Mr. Skeet: Does my hon. Friend expect to build any further coal-fired power stations, or will they be nuclear stations? Secondly, will he indicate the self-financing ratio of the National Coal Board's investments?

Mr. Moore: There are no current plans for additional coal-burning capacity. The latest figures suggest that in 1979–80 the board's internally generated resources, before taking account of Government grants of £251 million, were a negative £74 million. We have not yet received the publication of the board's 1980–81 accounts, which will contain the current figures.

Energy Prices

Mr. John H. Osborn: asked the Secretary of State for Energy what conclusions the Ministers of Energy of the European Economic Community reached after reviewing the Commission's report, following the National Economic Development Council task force report on energy costs to British industry, about subsidies, tax deductions, cost of energy to industry throughout European Economic Community countries and the consequential disparities.

Mr. David Howell: At the Energy Council on 24 June the Commission reported progress on the study of energy prices, which was requested by the previous Energy Council in March.
The Commission has undertaken to submit its detailed report in the near future.

Mr. Osborn: Are we moving nearer to a common energy policy and balancing cheapness and economy with security of supply? Will my right hon. Friend bear in mind that many British industrialists, especially the electric steel makers of Sheffield, do not like to see high-cost electricity from coal-fired power stations in their regions when their competitors are being supplied with electricity from nuclear and hydro sources at 60 per cent. below the price of British electricity? May I suggest some equalising and some nuclear power from France to keep our steel industry competitive?

Mr. Howell: In pursuing a common energy policy the main emphasis must be on national policies being developed in a common framework aimed at reducing dependence on oil and developing alternative energy economies in Europe. I have already commented on the changing scene of price disparities. My hon. Friend is right to draw attention to the considerable French advantage, which arises from early and bold decisions to build nuclear power stations on cost and to time. They have produced a pattern of electricity generation that provides a substantial advantage over not only the United Kingdom, but other parts of the Community, including West Germany. My hon. Friend is right to draw attention to the disparity.

Coal Industry

Mr. Ioan Evans: asked the Secretary of State for Energy when he next plans to meet the leaders of the National Coal Board and the National Union of Mineworkers to consider the future expansion of the coal industry.

Mr. John Moore: My hon. Friend and I hold meetings from time to time with representatives of the industry. The most recent was on 16 June.

Mr. Evans: Will the Minister take the opportunity to congratulate the board and the miners on their exports and their increase in productivity? Is that not a tremendous tribute to that publicly owned industry? Will the Minister ensure that the National Coal Board receives the financial wherewithal to develop new coal fields, such as the Vale of Belvoir, and Margam in South Wales, and to invest in the Phurnacite plant, so that we can get the smokeless fuel which is required?

Mr. Moore: With regard to the first series of questions, later today I shall take the opportunity to congratulate the miners and the management of the industry on their excellent and continuing increase in productivity, which was up in the first 12 weeks of this year by more than 3·6 per cent. against the comparable figure last year. Absenteeism, which is continuing to decline, has decreased by 2 per cent. The hon. Gentleman will recall the views both of the National Coal Board and of the Government on the subject of Aberavon.

Mr. Latham: With regard to the Vale of Belvoir, which three hon. Members have mentioned today, will my


hon. Friend confirm, as I am sure that he will, that my constituents, as well as the National Coal Board, have rights and that one of those rights is that the matter should be considered dispassionately and objectively by the Secretary of State?

Mr. Moore: I understand the point which my hon. Friend seeks to make. As I suggested earlier to other hon. Members, on 2 July my right hon. Friend the Leader of the House said that no decision had yet been taken. I have nothing further to add to that statement.

Mr. Welsh: Will the Minister bring to the notice of the National Coal Board the fact that because we shall be dependent upon coal for many years it should take on enough apprentices to ensure its production?

Mr. Moore: I recognise our priceless energy asset in coal. I imagine that the National Coal Board as well as the miners also recognise their commitment to the future of the industry and, therefore, to the recruitment of juveniles, which they can obtain only if the industry is successful and competitive. It is in their hands to attain that object and to attract recruits into the industry.

Energy Prices

Mr. Hannam: asked the Secretary of State for Energy if he intends to meet the Confederation of British Industry energy group to discuss industrial energy prices.

Mr. David Howell: I meet leaders of the CBI from time to time and discuss energy issues, including prices.

Mr. Hannam: Does my right hon. Friend accept that one of the factors affecting industrial energy costs is the high level of duty on heavy fuel oil? Will he clarify the reason why some previous contracts for Norwegian gas seem to prevent us from reducing the heavy fuel oil duty?

Mr. Howell: The duty on heavy fuel oil is a matter for my right hon. and learned Friend the Chancellor of the Exchequer. He made it clear at the time of the Budget that a reduction in heavy fuel oil duty would not be a cost-effective way of helping British industry, because of the influence of some gas contracts.

Mr. Campbell-Savours: Is the Secretary of State aware that an hour ago a member of the CBI, Messrs. Tootal, announced the closure of a major factory in my constituency—Condura Fabrics, of Flimby? Inasmuch as the availability of subsidised energy and feedstock prices in America and in the European Community have, in part, been responsible for that closure, will the Secretary of State, having already denied us a form of inquiry into energy costs on a regional basis, now inquire of that company specifically why it had to close, in the light of those energy costs?

Mr. Howell: The hon. Gentleman should be aware that with the deregulation of oil prices in the United States, for which this Government and many others were pressing, and with the active interest of the United States in deregulating gas prices, some of the severe pressure of the disparities of feedstock prices between here and the United States that arose last summer have been reduced. On that front, therefore, although one does not welcome any news of closures, some of the pressures have been eased—

Mr. Campbell-Savours: What about jobs in my constituency?

Mr. Howell: —as they have for the foundry industry, where there has been a reduction in the list price for foundry coke. That, too, has helped and is a benefit that helps jobs.

Mr. Crouch: Will my hon. Friend bear in mind that some parts of the chemical industry are suffering considerable disadvantages these days, not just because of energy prices, although energy prices are the major factor which is putting the chemical industry at a great disadvantage compared with Continental competitors? Will he bear in mind that high energy cost products, such as chlorine, are being put at a disadvantage by as much as 50 per cent. higher costs in this country compared with Germany? Will he look at that matter in particular?

Mr. Howell: I shall bear those points in mind. The NEDC task force identified the disparities at the beginning of 1981 in its examination of energy prices. Since then, with the fluctuations in exchange rates, there is likely to have been some change in energy pricing. At the same time, prices are rising on the Continent. I mentioned earlier that electricity prices in France rose by 15 per cent. last week and industrial gas prices by 22 per cent.

Oral Answers to Questions — HOUSE OF COMMONS

Parliamentary Terms

Mr. Canavan: asked the Chancellor of the Duchy of Lancaster whether he has any plans to alter the periods of the year when Parliament sits.

The Chancellor of the Duchy of Lancaster, Paymaster General and Leader of the House of Commons (Mr. Francis Pym): I have at present no such proposals to make to the House.

Mr. Canavan: Why is it that the dates of the Summer Recess seem to be determined more by the dates of the grouse shooting season than by the dates of children's school holidays, which in Scotland are sometimes almost over by the time Parliament goes into recess? Would it offend the Tory blood sport brigade all that much if this year the 12 August deadline were supplanted by Prince Charlie's wedding date?

Mr. Pym: As the House knows, many factors have to be taken into account in deciding the dates of the recess. I have much sympathy with the hon. Gentleman and with all hon. Members whose children are on holidays while we are not in recess. As recently as 1978 a Select Committee considered this and related issues. It found that most Members preferred the present arrangements. Therefore, it recommended no fundamental change. When the House debated the Select Committee's report there was no indication of an opposite weight of opinion. That does not alter the fact that I have sympathy with hon. Members whose children are on holiday while the House is sitting. However, until the House as a whole decides to make a change the existing arrangements will continue more or less as before.

Mr. Kenneth Lewis: Is my right hon. Friend aware that it seems to me and to many others that whatever Government are in power the prosperity of Britain grows in inverse proportion to the amount of time that we spend legislating in this place? In an attempt to help the hon.


Member for West Stirlingshire (Mr. Canavan), will my right hon. Friend ensure that in the next Session there is a considerable reduction in the number and weight of Government Bills, so that we may get away from this place a good deal earlier?

Mr. Pym: I hope that my hon. Friend will agree that our legislative programme has been somewhat lighter this Session than in the previous Session. We shall have to await what the Government decide for the next Session. I am well aware of my hon. Friend's request and the desire of the House to have less legislation.

Mr. John Silkin: I have every sympathy with the view of the hon. Member for Rutland and Stamford (Mr. Lewis) that the Government should legislate as little as possible. The proposal by my hon. Friend the Member for West Stirlingshire (Mr. Canavan) would not necessarily mean spending more time in the House; it would mean dividing the time in a more sensible manner.

Mr. Pym: The House can look at the matter again. However, when it was considered as recently as three years ago it became clear that the weight of opinion was to keep sittings more or less on the present pattern. I take a relaxed view about whether that is altered. The question is whether we should again so soon ask a Committee to consider the matter. I shall consider that possibility, but I have not received sufficient indication that opinion has changed to think that at the moment that would be an appropriate idea.

Mr. Silkin: Would not a sensible way to deal with the matter be to let the House decide again? After all, this is a new Parliament. There has been a big change, for good or evil, in the hon. Members who have taken their seats. That being so, I do not believe that we need another Select Committee, but it might not be a bad idea to let the House discuss the matter.

Mr. Pym: I shall consider that possibility.

Oral Answers to Questions — PAYMASTER GENERAL

European Community (Publicity)

Mr. Marlow: asked the Paymaster General what steps he is taking to publicise Government policy upon the benefits of European Economic Community membership.

Mr. Pym: Government Departments are each responsible for different areas of policy affecting our European Community membership and take steps to publicise them as necessary. Ministers also make speeches from time to time on the benefits of membership, and I myself made such a speech to the Conservative Commonwealth and Overseas Council on 6 May.

Mr. Marlow: Would my right hon. Friend be kind enough to take the House into his confidence with regard to his exciting new programme to put the facts of the Community before the British public? Many of us would like to help to put the facts of the Community before the public. What truth is there in the report in The Guardian of Ministers having to put in returns to him on a weekly basis of what speeches they are making on the Community? How are those returns going?

Mr. Pym: There is nothing to hide. I take every opportunity, as do all Ministers, to make the facts

available. It is true that recently I have been looking at the Community from a regional point of view and obtaining material from the Commission, the Foreign Office and other sources about the regional impact of the Community. There is nothing new about that.
As regards the second point, my predecessor and I have kept a broad check on the occasions that Ministers have for making speeches. Some of them use some of those occasions for presenting the facts about the Community. No doubt my hon. Friend will do the same.

Mr. John Silkin: Will the Paymaster General give the greatest possible publicity to the recent report of the directorate of research and documentation of the European Assembly, which says, first, that the United Kingdom would be better off financially if it left the Community and, secondly, that there would be no great difficulty in its doing so legally or in any other way?

Mr. Pym: I do not accept those arguments. As the right hon. Gentleman knows, the Government believe that our membership is overwhelmingly in the national interest. We take such opportunities as we think appropriate to explain why we take that view, and the importance of it. Therefore, I do not believe that it is likely that I shall do much about the document to which the right hon. Gentleman referred.

Mr. Sainsbury: Will my right hon. Friend confirm that one of the facts that is not in dispute is that the European Community is by far our largest export market? Is any information available on the regional balance of those exports and therefore how many jobs in each region are dependent upon our continuing membership of the Community?

Mr. Pym: I am in the process of obtaining figures which I hope will answer that question. It seems to me that a presentation on a regional basis, in some cases, would be of more interest to the people in the regions than a national presentation.

Mr. Ioan Evans: Does the Paymaster General recall that a great inducement in the referendum campaign for people to vote to stay in the EEC was that it would help employment? How does he explain that when unemployment has doubled in the past few years and is increasing by more than 1 million a year, and countries outside the EEC, such as Austria and Norway, have a much lower unemployment?

Mr. Pym: One should be careful about the conclusion that one draws from that. Unfortunately, unemployment is increasing in a great many countries. However, our exports to European and Community countries have increased more than those to other countries, and the number of jobs that that provides is considerable and has been increasing. That is another reason why our membership is an important part of our national policy.

Mr. Viggers: Did my right hon. Friend have a chance this morning to read a remarkable article in The Times, which pointed out that the Labour Party's foreign and defence policy is almost entirely consistent with Russian military and foreign policy? Is he aware that the article states that one of the most important planks of both Labour and Russian policy is that Britain should withdraw from the EEC?

Mr. Pym: I have no doubt that that matter will be debated a great deal further, but we have the responsibility


to explain why it is in our interests to remain in the Community, and that we try to do. Equally, it is vital for the defence of the country that we remain in NATO, and

that depends on an agreement with our Allies, which is critical. I read the article, and I have a certain sympathy with it.

Disturbances (Southall and Liverpool)

The Secretary of State for the Home Department (Mr. William Whitelaw): With permission, Mr. Speaker, I will report to the House on the violence which occurred on Friday 3 July in Southall, London, and on 4–5 July in Toxteth, Liverpool. The violence in these two places arose in different circumstances.
The disturbance in Southall began when a group of white skinhead youths began smashing shop windows in the Broadway. Word of this soon passed within the local community, and a group of Asian youths gathered near a public house where skinheads were listening to a pop group. The pub was attacked, and the police, in their attempts to keep the two sides apart, were assaulted with petrol bombs, bricks and other missiles. As the police were increasingly reinforced they brought the disorders under control, but 105 officers, two firemen and three ambulancemen were injured. Twenty-five members of the public were treated in hospital. There was damage to property, and 23 arrests were made. There were some further disturbances in Southall on Saturday, but the scale of the violence of the previous evening did not recur.
In Toxteth, in Liverpool, on Friday evening, a group of police officers attempting to arrest a youth whom they believed to have stolen a motor cycle were set upon. The following evening, when police were called to an alleged incident in the area, they were again attacked, on this occasion ferociously, with bricks and other missiles. Reinforcements were called as buildings were set alight, and the police were assaulted with petrol bombs. The area in which the disturbances occurred was cordoned by police and brought under control. Seventy-five police officers were injured, one of them seriously. Fifteen arrests were made.
The worst violence of the weekend occurred last night in Toxteth, and the House will be aware of its main features. The police were faced with concerted violence by white and black youths hurling missiles, including petrol bombs, and setting fire to and looting buildings. The cordons that the police formed to prevent violence spreading to other parts of the city were attacked by having stolen vehicles driven at them. The fire service was unable to bring its equipment into the area to control the buildings that were ablaze. The 92 occupants of an old people's home had to be evacuated. To prevent further violence and damage, the chief constable authorised the use of CS gas. This was effective, and the rioters were rapidly dispersed.
The Merseyside police were reinforced very quickly by officers from the Greater Manchester, Cheshire and Lancashire forces. None the less, the injuries sustained and the destruction of property were serious. One hundred and twenty-eight police officers were injured and forty-seven are still detained in hospital. Five firemen were also injured. Fifty-three arrests have been made.
This weekend, particularly in Liverpool, the police were attacked with an extraordinary ferocity. Violence at such a level must be firmly met if people and property are to be protected. I make it clear that chief officers of police will have my full support in taking positive action when necessary. In the circumstances of Sunday night, the chief constable of Merseyside had no alternative to using CS gas. Distasteful though this was to him and to me, I believe that he was totally right in that decision.
In the light of the new intensity of the violence I have decided that better protective headgear and fire-resistant clothing must be available to the police, and steps will now be taken with police authorities to this end. The working group that I set up after the Brixton disorders will carry these decisions forward.
Throughout the weekend I have been in close touch with the Commissioner of Police of the Metropolis and the chief constable of Merseyside. They have both reported to me personally today. As far as the events in Southall are concerned, the commissioner will present a detailed report to me, and Southall will form a part of the study into racist attacks which is currently under way. The chief constable of Merseyside will, of course, be making available to me the report that he presents to his police authority.
The House will wish to pay tribute to the officers of all the police forces involved and to those from the emergency services, both the fire and ambulance services, who sought to carry out their duty in the face of such determined opposition. Violence of this nature cannot be tolerated in a free society. The Government are determined to see that people are protected. For that to succeed, those to whom we entrust this task must have the full support of all community leaders and the whole nation.

Mr. Roy Hattersley: May I first offer the Opposition's sympathy and support to the police and fire officers and ambulancemen injured in pursuit of their wholly legitimate duties? May I also endorse the Home Secretary's determination to end violence of a character and intensity that cannot and must not be tolerated in a free and democratic society? We on the Opposition Benches utterly condemn the arson, looting and mindless violence of the past three days.
The Home Secretary was told that the violence in Toxteth and Southall arose from different causes, which is an essential fact to remember in the debate which is bound to follow. I accept and endorse that fact, but will he confirm that those two areas share a common feature with Bristol and Brixton; they are decaying central areas of old cities where there is intolerably high unemployment, unacceptably low levels of social services and abysmally inadequate housing? The problems have been compounded by escalating youth unemployment, for which the Government must take a large share of responsibility. Will the right hon. Gentleman accept that the problems are likely to intensify over the next few weeks, with the enrolment of thousands more young people, as they leave school, in the dole queue?
Will the Government, therefore, now accept their obligations to inner city areas to improve housing, increase employment prospects and end the despair and disillusion that were a major cause of this week's chaos? As even the skinheads who invaded Southall last Saturday are part of the pattern of disadvantage and deprivation, will the Home Secretary look again at the Government's inner city policy? Will he also look again at the funds that the Government provide for housing and social services and at the prospects for employment of both black and white young people who live in those deprived areas?
May I also ask the Home Secretary to accelerate and broaden his inquiry into racial violence to include the whole question of urban deprivation and the product of that deprivation in incidents such as the one at Walthamstow last week, which the police themselves described as murder through racial attacks? It is absolutely essential


that the Government, who will have my support and that of the Opposition in tackling the symptoms of these problems, should also attack the causes of the problems. It is essential that that process should begin with an opportunity for the House to debate why incidents of violence and tragedy such as those we have witnessed, uniquely, over the past few days have come about.
I therefore ask the Home Secretary to use his influence and his good offices to ensure that before Parliament rises, first, the inquiry into racial violence, its causes and results will be presented to the House; secondly, that we have an opportunity to debate that report; and, thirdly, that an opportunity will be provided for us to argue, as we intend to argue, that the causes of such incidents are social and economic and that until the social and economic circumstances are changed such incidents are likely to continue?

Mr. Whitelaw: In answer to the right hon. Gentleman's last point, I certainly understand the feeling in the House that there should be a debate on these circumstances. I shall of course speak to my right hon. Friend the Chancellor of the Duchy, who is beside me. As Leader of the House, it is his responsibility, but I personally and, I am sure, the Government as a whole would greatly welcome the opportunity for such debate.
As to whether the report of the inquiry into racial violence can be ready for such a debate, I shall of course do my best, but I must point out, as I am sure the right hon. Gentleman will accept, that the more we broaden the inquiry and the more work it is asked to do, the more difficult it is to bring it to a quick conclusion. I think that that is a reasonable statement. [Interruption.] I did not quite hear what the hon. Member for Feitham and Heston (Mr. Kerr) said, but I understand that it was broadly in sympathy with what I was saying.
On the other extremely important points raised by the right hon. Gentleman, first, I am most grateful to him for the sympathy and support that he gave to the police and to all the emergency services, including both fire and ambulance workers, who performed their duties in very difficult circumstances with great bravery and with very high morale. Many of them have suffered worrying injuries, and I am grateful to the whole House for its sympathy to those people and their families.
On the question of dealing with violence, I am again grateful to the right hon. Gentleman for his firm support on the need to deal very firmly with mindless violence in our society. He raised many of the social reasons why such violence should occur. Many different reasons for actions may be put forward relating to the social conditions of our country, but one thing there cannot be. There can never be any reason or any excuse for violence of the sort that we have witnessed. As to the various social reasons put forward by the right hon. Gentleman, it is worth pointing out that the Liverpool inner city partnership will receive £17·6 million in 1981–82, and a further £17·2 million will be available to the Merseyside development corporation. Those are not sums which can be easily written off.
I return firmly to my major point. Of course the House should debate all these matters, but I hope that it will not at any time get into the habit of imagining that there can be any reason or any excuse for mindless violence in a free society.

Several Hon. Members: rose—

Mr. Speaker: Order. I propose to call first the two hon. Members whose constituencies are directly affected.

Mr. Richard Crawshaw: I thank the right hon. Gentleman for his statement and add my appreciation of the police who, on two nights of violence, carried out their duties in an exemplary manner. I am sure that the House will wish to send sympathy to those who were injured and to the many residents who have suffered serious loss of property. If there is any small comfort to be gained, it would appear that this was not a case of racial strife.
I wonder whether the right hon. Gentleman is aware of issue No. 20 of the Granby community association newsletter, published in May this year and headed "The Brixton that Never Was". Apparently, it managed to stop a procession which had been planned with the object of arranging a clash within the constituency. The statement in the community journal reads:
Did they want to start trouble between the community and the police or between black and white? Did they want another Brixton? If they did, then Granby certainly didn't.
That was issued by the community association covering the area in which the rioting took place at the weekend.
Is the right hon. Gentleman aware that although there is high unemployment in that area there is high unemployment in other areas? Yet people in other areas do not resort to this kind of violence, which must be stamped out whatever excuses are given.
What I have to say next may not find favour throughout the House. I do not believe that unemployment was the cause of the trouble, nor is it correct to blame it on the housing in that area. The area of the rioting has many thousands of new houses.
I believe that these events came about because, rightly or wrongly, there is a genuine belief not only in the black community but in the white community that in that area the enforcement of law and order is not even-handed. This could be the subject of investigation, so I shall say no more than that. But does the right hon. Gentleman agree that although no element of our community is entitled to more privileges than anyone else, people must never be made to feel that they are being treated less equally than anyone else?
Will the right hon. Gentleman consider removing the police from their "panda" cars and Land-Rovers, where they remain remote from the community that they are patrolling, and get them back on the beat, so that they can get to know the community and, even if it is against police regulations, knock on a door and go in and have a cup of tea with somebody in the area? Only in that way will it be possible to restore trust and confidence between the police and the community.

Mr. Whitelaw: I am grateful to the hon. Gentleman for the sympathy that he expressed and for the support that he has given to the police. The chief constable told me this morning that he was extremely grateful for the helpful way in which the hon. Gentleman approached these problems at a very difficult time for the police in his constituency. I felt that I should say that to the hon. Gentleman and to the House.
As for what has been done by the community leaders, I am glad to hear what the hon. Gentleman said and I accept it at once. Many hon. Members may have heard


Mr. Wally Brown, a community leader, on the radio this morning. I understand that he, too, has done his very best to help in the difficult situation, and he deserves all possible support and credit for what he has done.
I entirely agree with the hon. Gentleman about the need for law and order to be even-handed. There is a great deal of talk about that today. It is important for all of us in the House to assert firmly that all our citizens are entitled to the protection of those who are appointed by us to look after and protect them. However, they need to be supported, but that protection must be even-handed between everyone. It is important that law and order should be equally enforced throughout the community.
As for the hon. Gentleman's last point, chief constables are very anxious to get more officers back on the beat. Perhaps I may make the obvious but nevertheless important point that if it had not been for the policies of this Government, which have enabled 6,000 more police officers to be on the streets in England and Wales, there would not have been the opportunities of doing that.

Mr. Sydney Bidwell: I endorse the condemnation by the Home Secretary and my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) of violence that causes injury to innocent people, including in many circumstances the police themselves. I extend my sympathy to those who have become victims of it because essentially they are victims of mismanagement of affairs by this House. Of course, there are similarities between the events of Toxteth and Southall. I hope that the Home Secretary understands that, but I am grateful to him for drawing a distinction between the events of Toxteth and Southall, because, while there are similarities, which have been described, there are also many dissimilarities.
Does not the Home Secretary agree, as he seemed to suggest in his statement, that these events arose from provocative action by skinheads, some of them members of neo-Fascist racist organisations? Will he undertake to ensure that the Commissioner of Police of the Metropolis carries out a thorough investigation into those undoubtedly premeditated acts, which brought 300 to 400 skinheads from other parts of London to trigger off the disturbance in my constituency?
Finally, does not the Home Secretary agree, on the basis of all the reports that the Home Office receives, that basically Southall is a peace-loving community, where the representatives of the ethnic minorities—they are not minorities in my constituency—have excellent relationships with the police, and that peace and harmony have existed there for many years? The people of Southall cannot take this sort of action from outsiders who come in and smash up Asian people's property. If the police are not seen to be acting with the alacrity that they should always show—there are aspects of that in this case, and I hope that the commissioner will listen carefully to the community leaders—and if they are not seen to be the protectors of the ethnic minorities, undoubtedly those people will form groups in order to protect themselves.

Mr. Whitelaw: The hon. Member has done a great deal to further good race relations in Southall. That should be said firmly. It is therefore all the more disappointing to him, as it is to all those people who have worked hard to that end, that this trouble should have occurred. I am grateful to the hon. Gentleman for saying that much has

been done by the police in the Southall area to improve those relations. I believe that to be so. There are certain officers who have given a great deal of their time to that end, as he and I know.
As to the problem of people coming in from outside, and the speed of the reaction of the Metropolitan Police, of course the commissioner will look carefully into that aspect. I spoke to him about it this morning and he appreciates that. I accept immediately that good race relations can be disturbed by people from outside. and I believe that that is the case in Southall. The police have to guard against it and have to be seen to be reacting quickly.

Several Hon. Members: rose—

Mr. Speaker: Order. It is clear to me from the exchanges that have taken place that there is the likelihood of a debate before the House rises for the Summer Recess. We cannot debate the matter this afternoon. I therefore propose to allow questions on this subject to run for another quarter of an hour, and then we shall have to move on.

Mr. Anthony Steen: It would seem that there is a total breakdown of law and order in the Toxteth part of Liverpool, and I think that there is a serious risk of its beginning to spread. Will my right hon. Friend the Home Secretary consider declaring a state of emergency if these problems continue? Does he agree that we cannot wait for the results of more reports, of the passing of more Acts of Parliament and more statements? Will he therefore appoint a Minister with special responsibility for the city areas, charged with the task of getting to grips with the increasing discontent and anarchy that are evinced among young people in many parts of the country?

Mr. Whitelaw: There is no question, as I hope I made clear in my statement, of waiting for reports of any sort. I have made clear my support for chief constables to take any action that they believe to be necessary in this difficult situation. I have also made it clear that I am moving at once on the provision of protective headgear and fire-resistant clothing for the police. I doubt whether the appointment of one Minister would be worth while, but we shall certainly work in every way that we can to improve conditions in the area.

Mr. J. Enoch Powell: In which town or city does the right hon. Gentleman expect the next pitched battle against the police to be fought?

Mr. Whitelaw: I very much hope that both the right hon. Gentleman and I will do everything that we can to make sure that no other disorders of this sort occur. I believe that to that end neither the right hon. Gentleman nor I should speculate in the way that he suggests I might.

Mr. Eldon Griffiths: Is my right hon. Friend aware that, despite the terrible injuries that the police are suffering, and despite the verbal brickbats that have been hurled at them by many who should know better, all ranks of the police service are determined to uphold the rule of law, and that they will continue to do so without regard to colour, race, creed, rank, or political interest?
I thank my right hon. Friend for what he said about protective clothing for the police, and I urge him to move as quickly as possible. Specifically, will he ensure that


fireproof equipment is available to police officers, and see whether their training, particularly in the higher commands, can be improved to deal with tactical riot situations? Will he look quickly at the question of improving the powers of the police to stop and search for offensive weapons and liquor those who may be going on to cause disturbances?

Mr. Whitelaw: I am grateful to my hon. Friend for his comments. I entirely agree with him about the dedication of the police officers concerned, both the commissioner and in particular the chief constable of Merseyside, whose force had two nights of extreme problems. Those officers were determined to fulfil their duties, and throughout their morale remained high. Evidence of that is the fact that many of those who were injured were anxious to get out of hospital and back to help their colleagues in the area. That shows a high dedication and morale.
As to my hon. Friend's other points, of course we shall consider training improvements and fireproofing equipment. The question of the powers of the police is obviously a longer-term and more difficult problem, but of course we shall examine it.

Mr. David Alton: Upper Parliament Street, which was the scene of the conflagration last night, is on the border of the constituency represented by my hon. Friend the Member for Liverpool, Toxteth (Mr. Crawshaw) and my own constituency, and many of my constituents were affected last night and the night before by looting and rampaging through the streets. Will the Home Secretary give an assurance that the many people who lost their livelihood in the riots will be given the opportunity of obtaining financial support to re-establish themselves in the area?
Secondly, what action does the right hon. Gentleman intend to take—in view particularly of the statement of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) about the firm resolve to tackle the violence in the area—against those who have circulated in the Toxteth and Edge Hill area a leaflet saying:
We defend all those arrested during these events and call for their immediate release and the dropping of all charges against them",
bearing in mind that the leaflet was printed and published at 70 Victoria Street, headquarters of the Liverpool Labour Party? The telephone number on the bottom of the leaflet is that of a Labour parliamentary candidate, properly selected and agreed by the national executive of the Labour Party.

Mr. Whitelaw: The hon. Gentleman's last point is not a matter for me. Other people have their responsibilities in that regard. Claims for compensation will, as in other areas, be dealt with under the Riot (Damages) Act 1886. This matter will be pursued.

Mr. William Shelton: Is my right hon. Friend aware that the country will view with great unease continuation of the kind of riot that has been experienced over the weekend, especially under a Conservative Government? Is he also aware that the police are the victims of a campaign of hatred organised by elements that wish to disrupt our society? Will he consider amending the Public Order Act in order to limit the distribution of the

sort of leaflets that the Hon. Member for Liverpool, Edge Hill (Mr. Alton) talked about, of which I have seen all too many in the Brixton area?

Mr. Whitelaw: I agree with my hon. Friend that there are those in our society who wish to undermine it. As has been shown in other countries, those who do that make their first target the police. That is why I have spoken of the importance that I attach to the giving by all the leaders of our community, in the House and outside, of the fullest support to our police service.
With regard to the leaflets, we can consider amending the Public Order Act. I think that many of those who may have some responsibility for the leaflets can act in advance of such amendments.

Mr. James A. Dunn: I join with other hon. Members who have expressed sympathy with the victims of the violence. I hope that they will soon recover. I also express my sympathy with those who have lost property and my admiration for everyone in the emergency services and the personnel at the old people's home who so valiantly stood fast in great difficulty.
Like other hon. Members who have put questions to the Home Secretary, I have just come from Toxteth. Is the right hon. Gentleman aware of the conflicting reasons given by many responsible people for the civil disorder and public unrest? In the circumstances, does not he accept that the only way to ascertain the truth and give everyone an opportunity to speak of the serious factors involved is to have an independent inquiry at the earliest opportunity to deal with the wildest allegations that can be made? If they are true, they should be dealt with, but politicians cannot do it.

Mr. Whitelaw: I am grateful for what the hon. Gentleman said, particularly about the personnel in the old people's home. They suffered a very unpleasant experience and behaved with considerable fortitude.
I realise that conflicting reasons are given for what happened. That is why I appreciate that it would be valuable to have a debate on all these matters. We already have Lord Scarman's inquiry into certain aspects. We also have the inquiry into racist attacks, which I set up. It is very important that we should be clear in our minds that we shall act. Many inquiries can give views on how we should act, but there are moments when action is crucial, and I believe that this is one of them.

Mr. Michael Colvin: I wholeheartedly endorse what my right hon. Friend said in praise of the police and their action over the weekend. Will he confirm that they must be properly rewarded for the very important and, alas, sometimes very dangerous job that they do in preserving law and order? Will he take this opportunity to dispel the disquieting rumour, reported in the press over the weekend, that the Government are having second thoughts about implementing in September the Edmund-Davies recommendations on police pay.

Mr. Whitelaw: Under the Edmund-Davies arrangements, police pay is considered annually under a formula by the police negotiating board, which will meet later this month. The situation will be resolved from there.

Mr. Eric S. Heffer: Is the Home Secretary aware that as soon as I heard about the leaflet supposedly coming from the Labour Party in Liverpool I checked with the party office? It is totally untrue to say that it was issued by the Labour Party. As the Labour Party's organisation chairman I have asked that a copy be sent to us so that the national executive may look at it and investigate.
Is the right hon, Gentleman also aware that to people like me—I lived for nearly 20 years in the Toxteth area—the scenes in Liverpool have been horrific? We have been very distressed. But while giving full support to the police in their efforts to bring the situation under control, is it not clear that we need to go much deeper than saying how disgraceful it is, and condemning the violence? We need to understand the causes of the violence.
There must surely be a correlation between what happened and the fact that there is 40 per cent. unemployment, with youngsters doing absolutely nothing. Their frustration and anger are being expressed against the forces of authority. That is being done by black and white youth together; the matter is not racist, as some hon. Members have suggested. Is it not clear that we need positive, immediate, emergency action to take the youngsters concerned off the streets, with emergency centres to give them employment? The Government should concentrate on doing that, getting rid of the basic causes rather than simply saying "How disgraceful" and "We are upset by what has happened."

Mr. Whitelaw: I said at the start that I would not become involved in the personal argument between the hon Gentleman and the hon. Member for Liverpool, Edge Hill (Mr. Alton) and others in Liverpool. I think that I was wise to say that, and I stick by it.
As I said earlier, there are all sorts of social causes behind what happened. I have already spoken about the amount of money that the Government are giving to the Liverpool inner-city partnership and the money that is being made available to the Merseyside development corporation. It is a sad reflection that some of the equipment used in the trouble at Toxteth came from work being carried out under some of the schemes to improve the area. I regard that as a sad reflection on the efforts to improve it.
The hon. Gentleman spoke of youth unemployment. My right hon. Friend the Secretary of State for Employment has made many proposals for training schemes and the youth opportunities programme. We shall continue to develop these.

Mr. Peter Emery: Does my right hon. Friend accept that whatever the reason, the fact that 300 British policemen can be injured over three days is unacceptable to everyone? Will he bear in mind that many people find it strange that there were only 90 arrests? Is that because the police are concerned about being able to ensure that after arrest they can secure a conviction? Is it not one factor that many people are attracted to the areas concerned when they hear of riotous behaviour and then become embroiled in it? If that is so, is there not sense in amending the Riot Act so that the police may have power to act against anyone attending a riotous assembly?

Mr. Whitelaw: If that would be the result of amending the Riot Act it would be desirable, but I doubt whether that is needed in order to do what my hon. Friend suggests. If it is, I shall consider it.
As regards the number of arrests, in the sort of melees and disorders that were taking place last night such action is very difficult. I shall look into this aspect, too, but there can be no question of the police holding back in any way, which I have heard suggested. If people at the scene should be arrested, they will be arrested.

Several Hon. Members: rose—

Mr. Speaker: Order. I shall call one more hon. Member from each side.

Mr. Robert Kilroy-Silk: Does the right hon. Gentleman accept that, although violence of any kind cannot be justified and must be condemned, his only positive initiative today has been to talk in terms of additional precautions and protective clothing for the police, and that he cannot deal with circumstances of this kind unless he is prepared to inquire into their causes?
Although disturbances of this kind may have some connection with the social and economic conditions referred to by my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley), may I point out to the right hon. Gentleman that if this were just a matter of the high level of unemployment an outbreak of violence of this kind would have happened first in Kirkby, in my constituency, where there is greater social deprivation and a higher level of unemployment?
Will not the right hon. Gentleman accept that there may be something seriously wrong about the relationship of the police with this community, as has been suggested by me and others of my hon. Friends on a number of occasions? Will not he now demand an investigation into the policing of that area? Unless he is prepared to discover the causes he will be dealing only with the symptoms.

Mr. Whitelaw: We already have many other inquiries going on, but of course I will make—

Mr. Kilroy-Silk: rose—

Mr. Whitelaw: Perhaps the hon. Member will allow me to reply positively to his question. I was about to say something to please him, but apparently he is not prepared to allow me to. I was about to say that I shall certainly make an investigation of the sort that the hon. Gentleman suggests. It is important that such investigations should be made, and I shall look into the possibility.

Mr. Edward Gardner: Does not my right hon. Friend agree that the Liverpool police and the emergency services deserve public praise and congratulation for the way in which they managed against all odds to confine the riots within the Toxteth triangle? Will not he agree also that without the determination arid the courage of those forces the tide of terror, violence and destruction undoubtedly would have spread to the remainder of the city of Liverpool?

Mr. Whitelaw: I am grateful to my hon. and learned Friend. I agree entirely with what he said. I am encouraged, as I know the chief constable of Merseyside will be, by the general support from this House for the action which he took in very difficult circumstances to protect as far as he could the public and property in the area and, most important of all, to prevent the disorder spreading, which would have been quite disastrous.

STATUTORY INSTRUMENTS &c

Ordered,
That the draft County Courts Jurisdiction Order 1981 be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Pym]

Flags of Convenience

Mr. Clinton Davis: I beg to move,
That this House deplores the part played by Her Majesty's Government in opposing moves to take action against flags of convenience at the recent meetings of the Shipping Committee of the United Nations Conference on Trade and Development in Geneva and, more particularly, in its decision to vote against the recommendations supported overwhelmingly by the Third World countries on 6th June 1981; and, furthermore, considers that this action reflects the complete failure of Her Majesty's Government to work out a coherent shipping policy for the United Kingdom.
I start with the last part of the motion, which deals with the Government's lack of a coherent shipping policy. Nothing demonstrates that more forcefully than the abdication of responsibility by the Government during the recent shipping dispute, when they permitted a damaging and prolonged dispute to arise which fomented enormous bitterness that may take years to disperse and that was totally avoidable if only the Government had used their good offices to ensure that the reasonable request made by the National Union of Seamen and by my right hon. Friend the Member for Lanarkshire, North (Mr. Smith) and myself that the dispute should be referred to arbitration was met. If only the Government had done that, the dispute would have been avoided—and, ultimately, it was done. It is grotesque that a Government should stand back on the sidelines when a collision of that kind is likely to occur.
I might also say that I am totally sickened by the sort of intervention that we had during our last Question Time on trade matters by the hon. Member for Epsom and Ewell (Mr. Hamilton), who described the wages of our seamen as exorbitant. It may be very nice for an hon. Member coming from the pastures of Epsom so to describe the wages of our seamen, but that is not how the arbitrators decided. What the Government failed to do on this significant occasion is itself sufficient to condemn them in the terms of the motion.
On the morning of Saturday 6 June a monumentally important decision was taken by the shipping committee of UNCTAD, sitting in Geneva. As the culmination of nine days of debate and, unhappily, abortive negotiations to arrive at a compromise solution, which could have been adopted unanimously if only there had been some give on the part of the developed shipping nations to make some progress, a resolution was passed, by 49 votes to 18, calling for effective action to start against the scandal of flags of convenience.
That represented the real beginning of concerted international action, following determined and increasing efforts over more than three decades by shipowners to resort to flags of convenience. Incidentally, they are aptly titled, since they are flags which are far less inconvenient than the traditional flags for those unscrupulous shipowners who wish to avoid the stringent conditions imposed by genuine maritime countries in exchange for the privilege of flying their flags—and it is a privilege.
I had hoped that the response of the British Government would be to associate us with the aspirations of the Third world to obtain a fairer share of world shipping and trade, to seize the opportunity to refute the claim of the Communist nations to exercise a monopoly of concern about the plight of the poor of the world, and to give a decisive lead to the traditional maritime Powers. I am convinced that that would have been the line taken by my


right hon. Friend the Member for Lanarkshire, North if we had been in office. It would have made sense morally and in terms of our economic self-interest.
Let us make no mistake about it. There is overwhelming evidence that the growth of flag of convenience shipping has decimated the traditional flags, including our own, as well as playing a leading role in thwarting the legitimate interests of the developing nations. Our Government, not content with voting against what was by any standards a moderate resolution, were instrumental in leading resistance to any action being taken against the open registries. I believe that to have been shortsighted and in conflict with the long-term interests of our own shipping, and that it was motivated, in part at least, by the Government's dogmatic dislike of effective trade unionism even where its absence can be shown demonstrably to lead to the denial of basic human rights, as is clearly the case with many flag of convenience shipping countries.

Mr. Anthony Grant: I have been listening with keen interest to the hon. Gentleman's condemnation of the Government. One question arises immediately, and I think that the House would like him to answer it. When he was in office—and he was there for five years—the Labour Government pursued the same policy as the previous Conservative Government of which I was a member, and the same policy as this Government are now following. The hon. Gentleman was in the Department of Trade for five years, and I understand from a recent speech of his that there was concern about the matter from an early stage. What were he and the previous Government doing?

Mr. Davis: The hon. Gentleman is mistaking the position if he identifies the policy that we pursued with that of the present Government. If, before the UNCTAD meeting, the Government had said "We cannot act unilaterally", we should have understood the position, but surely it would be appropriate when, for the first time, an international debate is going on, with a resolution before UNCTAD, for the Government to associate themselves with it.
I made no bones about my attitude to flags of convenience during my time at the Department. What is more, the hon. Gentleman is wrong to say that we did nothing about it. We introduced a policy which, happily, received the support of both sides of the industry to do something which our own industry regarded as an abuse. That was a gross disparity between the non-domiciled seafarers' rates and the rates of those who were United Kingdom registered seafarers. That would have been eliminated. That was the result of a patient and exhaustive inquiry. What has happened to that under the Government? As in so many other respects, the Government remain inert.
I reject the allegation that the hon. Member for Harrow, Central (Mr. Grant) made. Time and time again, both nationally and internationally, the Labour Government stated their detestation of flags of convenience. I repeat that if my right hon. Friend and I had been in office there would have been no question of where we stood.
Indeed, the Government are out of step with previous Conservative Governments and with British shipowners. They took a diametrically opposing view in the 1950s and 1960s, and in those days flag of convenience shipping was

less of a problem. When Sir Robert Ropner was president of the Chamber of Shipping he called flag of convenience shipping "Public enemy No. 1". Mr. Hugh Hogarth, a well-known tramp-ship owner—not a ship-owning tramp—spoke of
The evil of the principle behind the flag of convenience".
The concept was evil and there was serious and unfair competition from those untaxed fleets.
A director of the Shipping Federation, Sir Richard Sneddon, said that the flag of convenience was
the greatest menace by which British shipping is threatened today, threatening the livelihoods of shipowners and seafarers, and in some cases the very economy of the truly maritime countries".
That was how he described the flag of convenience in those days.
So seriously was the threat viewed by the Macmillan Government in 1959 that they tried, unsuccessfully, to keep flags of convenience out of the maritime safety committee of the Inter-Governmental Maritime Consultative Organisation. No words could have been more disparaging to flags of convenience than those uttered by British shipowners and Ministers in those days, but since then flags of convenience have gone from strength to strength and now control about one-third of the world's shipping. The menace, referred to by Sir Richard Sneddon, has grown proportionately.
With the growth in flags of convenience, the casualty rate has reached unprecedented and horrifying proportions. In terms of gross tonnes, 71 per cent. of the losses at sea sustained in 1978 and 1979 were of flag of convenience and Greek ships. The argument cannot be that that is because they have older ships, because while the Liberian flag is much younger than the world average, its casualty rate is above that of virtually every European country except Greece.
What has caused this dyspeptic wind of change or political burp of the British Government? Let us examine some of the reasons that have been advanced, including those in the briefing of the General Council of British Shipping, which, no doubt, all hon. Members have had. It says:
There is no convincing evidence to the effect that open registry vessels are prejudicial to developing countries, to world trade or shipping in general".
It takes a bit of nerve to advance that argument , because if one rips away the tinsel one can see the gaping holes revealed below.
I believe that the Third world rejects the patronising sermons that are advanced from time to time by the OECD countries, that to phase out the flags of convenience would be inimical to the interests of the Third world. I think that the Government should remember the old quatrain:
A little murder now and then, A little burglarising, Won't earn the hate of fellow men, As much as patronising".
It is the patronising argument that is advanced time and time again by the Government, by the Minister, by the General Council of British Shipping and by the OECD. The Third world countries reject it because they know that the argument is not only about substandard shipping. That is important, but it is also important that the Government should use more resources—far more than they are prepared to use as a result of their cutbacks—to ensure that port control becomes effective and that they do not just pay lip-service to it. The Third world and every critic of Government policy recognise that that is an excuse for not


tackling the problem at its source. They reject the argument because they know what it is all about. They regard the flag of convenience as a mechanism to ensure that developed nations, through multinational corporations, keep control over world shipping, even when they consider that operations under their own flags are becoming increasingly uneconomic.
The Third world knows that the considerable rewards that are gained by flag of convenience vessels are not rewards for ordinary people in their country. Even the countries of registry of flag of convenience ships derive little or no advantage. They know that the bulk of registration fees and tonnage duties ends up in other pockets. They know that there is no thought of putting those moneys into hospitals and welfare services, or into improving the living standards in areas of desperate poverty. They know that most flag of convenience operators are more concerned with cutting labour costs and exploiting seafarers than in providing genuine employment opportunities. They know that there is no genuine link with their own economies and that they are excluded from effective decision-making which affects such operations.
That is illustrated by asking: where does power lie with a flag of convenience? One will find the administrative headquarters of the Somali fleet not in Mogadishu but in an office on the Place Vendome in Paris. One will not go to Monrovia expecting to register a ship under the Liberian flag, but to 103 Park Avenue, New York City, where the Liberian fleet is administered not by Liberians but by Americans.
The latest ludicrous suggestion—perhaps it is even sinister—is the one to which I referred in a debate at an ungodly hour on 21 May—perhaps it was 22 May by that time. Mr Richard Dresner, a London lawyer, announced that he was trying to flog off flag of convenience registrations over the counter in London by using some sort of legal device. He was reported in Lloyd's List as saying that recognised flag of convenience countries, such as Liberia and Panama, are now becoming much more particular about their requirements and are trying to go up-market and become respectable. He says that that is leaving room in the market for a wider and more streamlined service to owners. That is the gap that he is aiming for. He is planning to sell flag of convenience registrations over the counter—a sort of flag of convenience supermarket. One wonders what is next in line—Tesco's or Sainsburys? I am glad to inform the House that a colleague of the Minister informed me that Mr. Dresner has not yet had a customer. I am not against small businesses—I am all for them—but I hope that business stays that way for him.
At Question Time on 1 June the second line of defence was advanced—as it had been several times before by Ministers—by the Secretary of State. He said:
We wish to see the preservation of competitive international conditions for shipping in which each nation is free to set its own conditions for admission to its register, subject to the full observation of internationally agreed safety standards".— [Offical Report; 1 June 1981, Vol. 5, c. 628.]
I found that difficult to take, too, because one knows that the vast majority of flag of convenience countries do not fully observe internationally agreed safety standards.
I pose a question to which I hope that the Minister will reply at the end of the debate. When there has been talk about the Soviet threat, how is it that this and successive Governments have responded to requests for intervention from shipowners who complain that the Soviet Union undertakes unfair competition? They are right. It does. It has its internal pricing policies, and it has imposed abnormally low rates to undercut our cargo ships.
The Government in which I served knew, and the present Government know, that retaliation has been suggested as a way of fighting that threat. However, when it comes to flags of convenience they seem to apply to the doctrine of militant inertia. Is not the challenge posed by open registries at least equally based on unfair practices? I cite some examples: freedom from taxation; freedom from applying mandatory international obligations; freedom not to reveal the identities of shipowners when a vessel is in trouble; and freedom from having to recognise trade unions and decent hard-won standards. Here I pay tribute to the work of the ITF and the seafaring unions the world over, which have struggled so hard under the most difficult conditions to achieve those standards.
Further examples of unfair practices are: freedom from national manning scales, wage scales and social security requirements; freedom to recruit crews of any nationality and in the cheapest markets; freedom from restrictions on raising or transferring capital; freedom from obligations to train crews, which all traditional maritime countries willingly accept; and freedom from competent judicial State investigations when casualties occur. I readily admit that not every flag of convenience operator functions in those ways, but the majority do, and their predatory activities threaten seafarers' jobs here, in Europe and elsewhere.
A distinguished Swedish professor said that vessels flying flags of convenience represent a form of capital that is not subject to social control. That is right. Indeed, that is the name of the game. It is about cutting costs regardless of risk, which is why unscrupulous owners do it. That is the case against the flag of convenience.
It is all the more sad that potential refugees from our own flag have had their task made much easier by one of the Government's first acts—the abolition of exchange control regulations. How easy it becomes for the shipowner to resist every reasonable demand for a wage increase with the blackmailing threat of "Well, we will have to move to a flag of convenience if you go ahead with this claim". That is an echo of words which are now notorious, which were used at the bank rate tribunal nearly 25 years ago:
It may not be patriotic but it makes sense to me".
It is equally reprehensible—if not more so—when the game is played by publicly owned enterprises. Last week I wrote to Lord Trefgarne and to British Underwater Engineering Ltd, in which the National Enterprise Board owns a 70 per cent. interest. I learnt that it was operating eight submersible support ships, five of them under the Bermudan flag and three under the British flag, each vessel owned by a separate subsidiary company of BUE Ltd.
Those five ships flying the Bermudan flag employ Spanish crews, with British masters, and certain other certificated British officers when the vessels are operating in British waters. It is extremely reprehensible and provocative for the NEB to be party to the use of flags of


convenience vessels. I received a reply from BUE Ltd., and the first point that it made was extremely important. It said:
British operators receive no protection on the United Kingdom Continental Shelf where marine operations are foreign dominated. BUE's present marine operations are marginal in the extreme and without the ability to operate commercially might well have to be terminated, the conseqent loss of employment falling mainly in the Leith area".
That situation is arising time and again. I believe that, the Government should now take action to protect our own shipping, because other nations are doing precisely the same and taking advantage of the opportunities available in the North Sea and elsewhere. I repeat that it is appalling for a subsidiary of the NEB to use flags of convenience vessels.
Just as there is a gap in confidence between the advanced and the developing shipping nations, so a major gap in confidence has been revealed by the recent shipping dispute to which I referred earlier. That gap impairs our ability to deal with major issues, both national and international, affecting the future of our industry. How we deal with the Soviet threat, the liner code, a possible bulk code and flags of convenience all beg the question "How do we see the shape of the industry in the decade ahead?"
Let me state three propositions which, on the face of them, are, I think, uncontroversial. First, the merchant fleet is an integral part of our industrial and defence strategic effort. Secondly, we must always strive to maintain the highest standards of shipping and seafaring. Thirdly, we must continually seek to enhance the reputation of IMCO, to implement and adhere to its decisions with the utmost rapidity and care, and continually seek to introduce new initiatives to strengthen shipping safety and standards.
In 1977 we did just that by suggesting the idea of a marine safety corps to be applied internationally, so that IMCO could go to the help of developing shipping nations and assist in their safety standards. That, incidentally, may be part of the answer to the hon. Member for Harrow, Central.
In that connection I beg the Government not to treat IMCO expenditure like any other of their capricious cost-cutting exercises. Its work is invaluable in terms of saving lives. The Government must do nothing on the altar of economy to damage the superb co-operation that has been built up at IMCO, most notably under the present Secretary-General, Mr. Srivastava.
Uncontentious though my propositions are, they can all be impaled on the doctrine that market forces must prevail in shipping. However, in my view those propositions are not negotiable, and I conclude, therefore, that market forces have only a limited relevance to shipping.
If the Merchant Navy is vital to our industry and our defence efforts—the General Council of British Shipping was at pains to brief Members for the debate on the defence White Paper and point out that the merchant shipping effort was vital—can we really go on accepting a continuing reduction in the size of our fleet, with the ultimate logic that we shall become dependent upon other flags for the transport of materials essential to our economy and defence effort?
Whatever arrangements one may make with flag of convenience countries to repatriate ships in an emergency—there is always some doubt about the efficacy of such arrangements—the fact is that skilled seafarers cannot be produced at a stroke. High standards of safety,

manning and adherence to international codes can be expensive, particularly if viewed in the light of the permissive approach of some of our competitors. Yet to forsake them is, I hope, unthinkable if we are to seek to provide an example to others and to maintain a position of primacy in such matters.
Our own seafarers also expect, and are entitled to, increasing standards of pay and working conditions. Over the years they have secured massive improvements in productivity. Effective and expert crews can be sustained only if the conditions are right. It is surely common ground that we cannot compare our standards with those applied by the majority of flag of convenience countries, or even by some developing countries.
It is asserted by the owners that we are not competitive with other Western European Nations. Of course that sort of proposition has to be looked at with care—as, indeed, it was during the recent arbitration—but how do we compete if some shipowners see more and more advantage in paying lower wages, in applying worse conditions, and in resorting to a movement away from the traditional flags to the more dubious ones? Yet that is the obvious logic of market forces. Is it thinkable that we might accept the lowest common denominators in terms of safety and conditions of working, all to save money?
We must not only appreciate the profound threat that exists; we have to recognise that hitherto unconventional methods may be required to cope with it. The time has come for us to recognise the growing threat of protectionism. However undesirable this may have appeared in the past, we need to retaliate where protectionism is practised against us, as is the case with the United States.
There is a strong case for reviving a provision in the Labour Government's Merchant Shipping Bill—a provision that we were forced to discard as the price of getting the Bill, following the lost vote of confidence in March 1979. It was designed to prohibit undesirable foreign take-overs of British shipping. That was another case of lack of consistency on the part of the shipowners. First they wanted it, then they did not. Now they might be having second thoughts again.
The nation should have a stake in our shipping industry. I do not accept the operation of an unrestricted free market economy in shipping, as I have said before. I hope that before the next general election we shall devise a practical policy designed to meet our essential interests where they are under threat.
I advance this argument not from any ideological or doctrinaire stance but for purely pragmatic reasons. It is part of mobilising a defence strategy to retain a powerful and competitive shipping industry, which is vital to our national interest. I advance it because the Government have failed on so many counts, nationally and internationally. They have failed to intervene to prevent a wholly avoidable, damaging and long dispute, by insisting on arbitration, as they could have done. Instead, they have sat back and idled their time away. They have failed to put forward a cohesive policy in international terms. They have failed to bring forward at any time over the years any sort of material statement on shipping policy.
For all these reasons the Government stand condemned, and I invite the House to support the motion in the Division Lobby this evening.

The Under-Secretary of State for Trade (Mr. Reginald Eyre): I welcome this opportunity to set out the Government's position on shipping debates in UNCTAD and to place this in the context of our general shipping policy. The economic health of our shipping industry is most important to this Government—and in the shipping industry we include the shipowners, the seafarers and the shippers, for only through the contributions of all these interested parties can the industry benefit the nation as a whole.
It is well known that one-third of the United Kingdom's national income consists of international trade, and that the vast majority of this moves by sea. It is no exaggeration to say that we live by our seaborne trade. We therefore have the strongest interest in maintaining free access to efficient and economic shipping services.
We also have, and want to maintain, a strong merchant fleet of our own, which is an important invisible earner and an important employer. In 1980 the gross overseas earnings of the United Kingdom's shipping industry were over £3 billion. We need to bear in mind also that more than half of its earnings are made in the cross-trades—that is, British ships carrying cargoes neither to nor from the United Kingdom. Therefore we, perhaps more than many other nations, have a strong interest in preserving, as far as we can, an open world market in shipping services. Our shipping industry's earnings depend on this and our seafarers' livelihoods depend on it.
Because shipping moves world-wide it is exposed to protectionism and the restrictionist measures which countries may place on the freedom of shipping. These measures are equally damaging to our interests, whether they are designed to reserve or share cargo for a country's own shipping lines or whether they are simply designed to prevent access to its ports by the shipping of a third country. Our stake in the freedom of the world shipping market is such that we must resist restrictions on free access to shipping wherever they are proposed. They threaten our shipping earnings; they threaten our seafarers' jobs; they raise the cost of international trade on which as a nation we depend. It is within this context that we must consider the question that is before us today.
The Hon. Member for Hackney, Central (Mr. Davis) urged the Government to support proposals which in our view would do much more harm than good to our shipping industry and to the jobs that depend on it. The background is a proposal by the UNCTAD secretariat—for which it has so far obtained support from the developing country and Communist blocs—that what are called "flags of convenience" should be, in the rather slippery jargon, "phased out". What they mean in practice is that an international convention should be concluded whose signatories should pledge themselves to shut their ports to the shipping of non-signatories for nothing worse than the wrong of keeping their shipping registers too open to international investment—in effect, United Nations economic sanctions invoked on a few small countries for purely economic reasons.
What a dangerous precedent that would set—dangerous, above all, for the British shipping industry, with its dependence on the ports of the world remaining open to it, and with all the jobs that depend on it. But the

hon. Member—contrary to policy interests which he supported as a Minister—has recommended that the British Government should support that proposal.

Mr. Clinton Davis: Would the hon. Gentleman give further and better particulars of that allegation? When did UNCTAD consider this matter previously? When did I give support such as he is giving to flag of convenience countries, thereby aiding and abetting the worst possible abuses?

Mr. Eyre: The hon. Gentleman was, of course, in office in the Department of Trade, with the responsibility for shipping, for a long time. He was, therefore, responsible for the attitude of the Government towards shipping during that period in a way that justifies me in saying that the policy he has developed this afternoon is substantially different from that which he pursued as a Minister.

Mr. Davis: The hon. Gentleman must provide evidence. It is no good making bare assertions and then running away.

Mr. Eyre: I put the matter to the hon. Gentleman in these terms. The Department of Trade policy on flags of convenience is the same now as it was during the five years when he was a Minister. Our policy with regard to flags of convenience, which we shall discuss in detail, is unchanged from that pursued during the period when the hon. Gentleman was in office.

Mr. Davis: I promise not to keep on intervening. I think that the easiest way to deal with the matter is simply to put on record that the hon. Gentleman is not right.

Mr. Eyre: If I am not right, I accept it from the hon. Gentleman. I should like him to allow us to proceed through the consideration of this matter. He knows that I have no desire to mislead the House. I think, however, that I am justified in saying that his attitude towards flags of convenience in the speech that he has made today is substantially different from that which would have flowed from his previous position. We can perhaps come back to this point during the debate. I have no desire to mislead the House about the hon. Gentleman's position. I seek merely to debate his policy as he has advocated it.
We have to be very critical in our examination of the hon. Gentleman's reasons for developing the proposal that he has put forward this afternoon. He has said many things against flags of convenience. What he has not done is to tell us exactly what they are. This is not surprising because the truth is that the flag of convenience is little more than a term of abuse. It certainly has no internationally agreed meaning. If it has a meaning at all, it refers to national shipping registers which are open to ships beneficially owned in another country. But we should never forget that, although this is the only definition on hand, it includes the British register, as over 40 per cent. of United Kingdom tonnage is beneficially owned abroad.
I shall briefly explain what the Government believe would be the consequences of an indiscriminate assault on certain shipping nations that I believe the hon. Member is endorsing, and why the United Kingdom, like other industrialised democracies, has opposed it.
The proposal would do nothing to improve safety at sea; do nothing to control maritime pollution; threaten


directly over 40 per cent. of the British fleet; and threaten indirectly the trading opportunities of much of the rest of our fleet.
For both the last two reasons it would put British seafarers' jobs at hazard. It would raise the cost of world shipping, damaging the trade of both developed and developing countries, abridge the rights of certain other countries to self-determination in an aspect of their economic policy, and repudiate our obligation under the ports convention to avoid discrimination against other countries' shipping.
One of the most important questions affected by that list is safety. The hon. Gentleman has, in effect, asked us to believe that shipping would be safer if only all ships had to be owned by nationals of the countries in which they were registered. In the light of our experience of accidents at sea it is hard to see why that should be so.
Hon. Members on both sides of the House have frequently raised questions of safety and of the pollution of the maritime environment, and I believe they are quite right to do so. I am sure that there is no question concerning the United Kingdom's record, as it is second to none, both on the implementation of internationally agreed safety and social standards and on their enforcement. We have implemented more IMCO conventions relating to maritime safety and marine pollution than any other maritime nation. I am happy to join the hon. Gentleman in paying tribute to the work of the Inter-Governmental Maritime Consultative Organisation, which is proving very beneficial.
We must implement conventions only when we are sure that we can enforce them properly. Our ability to maintain this record would, of course, be in no way enhanced if we banned foreign-owned ships from our register.
We are anxious to see maritime safety standards improved world-wide. We are always seeking ways to improve our enforcement of the agreed standards and the level of international agreement in bodies such as IMCO and the ILO. The United Kingdom has worked and continues to work for the maximum development and observance of internationally agreed safety, social and environmental standards. Before 1979 we averaged between 500 and 600 unscheduled inspections of foreign registered ships calling at British ports a year. In 1980, I am pleased to inform the House, we increased inspection to 1,300, and this year we intend to' increase them even more.
I emphasise that the Government have no desire to soften the attack upon substandard shipping in any respect—quite the contrary. Just as we urge that States have the right to fix their own conditions of registry, we also urge that they accept the obligation to implement and enforce internationally agreed safety standards. It is certainly true that successive British Governments have been concerned about the safety of open registry vessels, although—this is an important fact of life—not of open registry vessels alone. I emphasise that point. Clearly, however, this could never justify an indiscriminate attack on all vessels of a certain country whether its register was open or closed.
The Labour Government recognised this, whatever they say now. This comes back to the point of dispute between us. The Labour Government rightly saw the solution in terms of a campaign against substandard ships regardless of registry. The present Government agree with the approach and sustain it. Indeed, we can take heart from

two developments in recent years. First, we have seen the open registry countries themselves improving their maritime administrations and acceding to IMCO safety conventions. Indeed, to take an example, Liberia has now acceded to more of the relevant IMCO conventions than many other countries. We hope to see them being enforced with increasing effectiveness. Secondly, and perhaps even more important in the context of enforcement, has been the international acceptance of the need for a strong port State enforcement system.

Mr. Clinton Davis: How will Liberia enforce the international obligations that it seems to have accepted when most Liberian ships never call at Liberian ports?

Mr. Eyre: The purpose of the international enforcement of port State inspection is that ships which move about the world will enter ports in countries accepting the agreement and will be inspected. That helps to enforce higher standards. The development of conventions and their international acceptance is an important step along the road to developing the international enforcement of higher standards. I am sure that the hon. Gentleman agrees that that is desirable.

Mr. James Johnson: The lowest common denominator operates. When Liberia attempted to stiffen its own conditions for vessels under the Liberian flag the vessels went to another State with lower standards. That means that we are sinking into the mud. Glib and facile statements about inspecting vessels are not enough when vessels then move to places with lower standards.

Mr. Eyre: I am not saying that the British Government support the continuance of substandard ships, whether they are open registry or not. Substandard ships exist with open registry flags and with other national flags which are not open registry. The point made by the hon. Member for Kingston upon Hull, West (Mr. Johnson) is interesting and relevant, but it is not the complete answer to the abolition of substandard ships which exist in open registers and in other national lines. The development of international conventions and the steady application of measures to increase standards by way of port enforcement will lead to a reduction in the number of substandard ships in the world.

Mr. Austin Mitchell: Why are the Government cutting expenditure on coastguards and their contribution to IMCO? Why do they not take the type of powers that the Americans have and exercise an annual inspection of vessels?

Mr. Eyre: The hon. Gentleman is wrong about a reduction in expenditure. I have just given the House figures for the number of inspections during the last year in which the hon. Member for Hackney, Central was responsible for shipping matters. They show that there has been a considerable increase in the number of ship inspections on the basis of port enforcement. The hon. Gentleman should take account of that improvement.

Mr. John Prescott: I appreciate the Minister's argument about Liberia. However, many ships which are not substandard are involved in accidents. Why was Liberia unable to complete the investigation called for by UNCTAD into


conditions on board ship? The answer apparently was that such ships did not return and could not give the information.

Mr. Eyre: I am not trying to champion the Liberian shipping registry. Liberia has begun to accept more international conventions and, consequently, is under greater pressure to raise standards. The intervention by the hon. Member for Kingston upon Hull, East (Mr. Prescott) is evidence that Liberia is coming under more effective pressure to raise standards. The British Government are in favour of international agreements and enforcement measures based upon raising shipping standards.
International conventions have now been negotiated which, when they come into force, will enable signatories to take action against substandard shipping entering their ports, including that of non-signatories. I emphasise that because it answers hon. Members' questions. This puts us and other countries which share our concern for safety and the marine environment in a far stronger position to tackle head-on the problem of substandard ships, and the dangers of lax maritime administration in other countries. We no longer need approach them sideways through open registries. Nor should we imagine that open registries have the worst safety record. Many vessels sailing under open registries maintain high safety standards. Many ships sailing under closed registries do not.
The statistics of maritime accidents reveal a situation about which no one should be complacent. But they certainly would not justify us in limiting our concern to open registry vessels, or in believing that all open registries were dangerous. So an assault on an other countries' registry conditions, even if we thought it right on other grounds, is neither necessary nor sufficient to enable us to enforce internationally agreed safety standards.
It is worth mentioning that during the recent discussions in the UNCTAD committee on shipping in Geneva the developed countries supported proposals by France aimed at improving the safety of all ships irrespective of register. We in Britain had some reservations on the detail of the proposals, but if they had provided the basis of a compromise in UNCTAD this would have been worth having.
It was particularly disturbing that the countries leading the UNCTAD campaign made it clear that they were not interested in improving safety and social standards, as higher standards would also apply to their own fleets. They claimed that the existing standards were already higher than they were able to meet.
We cannot accept a system of double standards for safety—one for the developed world and one for the developing world. Such an approach would endanger the basis of internationally agreed standards. At best we must be grateful for their candour. They have acknowledged that safer shipping is not the aim of their campaign.
It is the economic consequences of the hon. Member's proposal that would be so damaging to British shipping and British seafarers. We of course wish to see a healthy British shipping industry, with good job prospects. I realise that this concern is shared by the National Union of Seamen, and my noble Friend Lord Trefgarne looks forward to discussing this with the NUS representatives when he sees them later this week.
I must spell out the consequences of the hon. Gentleman's proposals. First, the proposal attacks the principle that international investment in shipping should be allowed world-wide. This strikes particularly at the British flag, because over 40 per cent. of the tonnage registered under the British flag is foreign-owned and could be driven away. I cannot think that this is what the hon. Member for Hackney, Central really wants, with its damaging effect on job prospects.
Secondly, if high-cost countries such as the United States were forced to repatriate the ships owned by their citizens to their own flags, the pressures on them to apply protectionist measures to overcome their lack of competitiveness would be enormous. Such a trend would be bound to damage the British fleet, because, as I have said, about half our business is in the cross-trades. I cannot emphasise too strongly the importance of that aspect of the British fleet. That must be borne in mind when the desire is expressed for the British fleet to remain big enough for defence purposes. In addition, few British owners have so far resorted to registering their ships abroad, so there would be few ships to be forced back to the British flag. That is a material point, which those supporting the hon. Gentleman should consider carefully.
Both those last two economic consequences would have one effect in common. They would markedly reduce the size of the British flag fleet, and the reduction in job opportunities for British seafarers could be dramatic. I cannot believe that that is what Opposition Members wish to see.
Let us consider some of the background to the current campaign within UNCTAD against open registries. As I have explained, the countries leading the campaign in UNCTAD have made it clear that their concern is not to improve safety, social and environmental standards. They are opposed to open registries because they believe that their existence is an inhibiting factor in the development of their own merchant marines. They believe that if open registries were phased out much of open registry tonnage would find its way to developing country registers. If that came about by damaging the efficient international use of shipping resources the process would benefit the trade of neither the developed nor the developing countries.
Although it is impossible to predict what would happen to open registry tonnage in such circumstances, it would be wrong to see the UNCTAD campaign as mere wishful thinking on the part of the UNCTAD secretariat. The current campaign is part of a wider campaign profoundly to change the present structure of international shipping. Other elements in the campaign include the United Nations liner code, whose authors meant to introduce the principle of world-wide cargo sharing into the liner trades but which is being disapplied within the Community and the OECD countries. The recent campaign to bilateralise the bulk trades follows that trend.
In particular, the phasing out of open registries and the bilateralisation of the bulk trades are inextricably linked. Most ships on open registries are bulk ships. If open registries were eliminated the world's bulk shipping trades would be disrupted. Such a crisis might indeed be seized as the opportunity to bilateralise the bulk trades, so that every country controlled 50 per cent. of all the bulk shipping in its direct trades. We could expect that to have two effects. First, it would cut right into the markets in which our own bulk fleet competes. Secondly, by removing competition from the trades it would lead to a


much less efficient use of resources and an increase in freight costs and, therefore, in the costs of raw material imports. So it would hit both the jobs of our seafarers, our costs of industrial production and the cost of living here at home. Opposition Members should bear those facts in mind when they press the Government to support current UNCTAD proposals.

Mr. Clinton Davis: The Minister referred to the pressures being brought from time to time upon the open registries. Will he take this opportunity to pay tribute to the International Transport Workers Federation for contributing in a substantial way to those pressures? Its low-pay campaign has forced Panama to take some long overdue action. Is it not right that the Government should pay that tribute when it is so richly deserved?

Mr. Eyre: I know that the hon. Gentleman has had considerable experience in this subject. He is no doubt familiar with the day-to-day working of the ITWF. I do not have that advantage. I repeat that, as a principle, the Government are not in any way seeking to perpetuate the operation of substandard ships. Therefore, the factors that lead to the advancement of good standards in the operation of ships—social, environmental and safety—are to be welcomed as contributing to increased standards of performance throughout the world.
Opposition Members' support for the proposals means that they support the concept that States should be coerced into accepting the abridgement of their sovereign right to determine their own ship registration requirements, and rights entrenched in the 1958 high seas convention and included in the most recent text of the United Nations Conference on the Law of the Sea. To do so would be to jeopardise our rights to determine our own economic policy in the important shipping area.
We must be clear that the proposals could be enforced against non-complying States only by the closing of ports to the ships of those States.

Mr. Austin Mitchell: Is it not simply a straightforward question of insisting that if standards are to be enforced on vessels with flags of convenience the sovereign right to fly which the Minister is defending, there should be an economic connection between the ship and the country concerned? It is as simple as that.

Mr. Eyre: I am seeking to spell out the economic consequences of the proposal and also certain of the dangers that would develop from the operation of the pressures that would be applied to countries internationally if the aim of UNCTAD were successful, namely, to eliminate the operation of open registry shipping. I emphasise that we would have to comply with the closing of ports to the ships of States that did not comply.
If we failed to comply—and for all we can see, under our present registration requirements we ourselves would be labelled an open registry—our ships would be refused entry to the ports of those countries that were applying the new convention. I ask the hon. Member for Grimsby (Mr. Mitchell) to recognise that. If, on the other hand, we followed the direction suggested by Opposition Members and complied by tightening our registration requirements to exclude foreign-owned ships—which, as I have said, constitute more than 40 per cent. of our tonnage—we would be obliged to close our ports to non-complying States even if those States were parties to the 1923 ports

convention, through which we are obliged to offer them the same treatment in our ports as we do to our own shipping.
It must now be clear that the path down which the hon. Member for Hackney, Central proposes that we should go is a highly dangerous one for British interests. It could lead to the loss of much of the British fleet, a reduction in trading opportunities for the remainder of the fleet, many British seafarers' jobs being put at risk, increased costs to developing and developed countries alike, an unwarranted interference in the sovereign rights of certain countries over the economic requirements of ship registration and the closing of ports to ships for economic reasons. I ask the hon. Gentleman to think again about the terms of the proposal. I cannot believe that Opposition Members would wish these consequences, which would be so damaging, to come about.

Mr. John Prescott: I congratulate my hon. Friend the Member for Hackney, Central (Mr. Davis) on giving the House the opportunity to discuss the question of flags of convenience and the Government's attitude to the recent UNCTAD conference.
I have been a Member of the House for 10 years and as a member of the National Union of Seamen I have a vested interest in shipping. Part of that interest is to retain jobs for British seafarers. There has been a decline by thousands of jobs available to British seafarers notwithstanding the Government's policy, which seems to amount to an empty promise.
My union has declared its view in a report entitled "Flags of Convenience: The Unacceptable Face of Shipping". The general secretary of my union, Mr. Jim Slater, was an adviser to the Government's UNCTAD delegation. The union has made it clear that British seafarers are concerned about the maintenance of their jobs. It is also aware of its social responsibility to seafarers of other countries, especially those from the Third world. We recognise that we have a responsibility to give the Third world a chance to share in shipping. That is a responsibility that the United Nations has asked all member countries to consider.
The reality of implementing such a policy can be difficult. However, my union has laid its policy on the line. It believes that there is a proper role for British shipping, British interests and British seafarers that will not run contrary to the legitimate demands of other countries that desire to increase their share of shipping.
We have witnessed a decline in the British merchant fleet and a consequent reduction in the number of British seafarers. Government policy has been inadequate. The time has come to reconsider our position in international trading. We have been given that opportunity by UNCTAD. Government policy is an important factor in international relations, and trade matters are being determined increasingly in an international forum. That is a fact which the Brandt commission has brought to our attention. The world will have to come to an agreement on such issues as the UNCTAD liner code, the open registry and the development of the Third world's involvement.
During my 10 years in this place I have spent considerable time campaigning with my union and the International Transport Workers Federation and other unions against flags of convenience and bringing to the


attention of the House the terrible deaths that are the consequence of open registry fleets. A few years ago in the Channel there were a number of collisions of vessels operating under flags of convenience. Dozens of seamen died. There seemed to be more concern about pollution problems arising from the collisions than about the deaths of seafarers.
An interesting example is that when the Liberians carried out an inquiry they had to "rent" a judge from Britain to head the inquiry. They did not have the necessary facilities in Liberia to conduct the inquiries that are associated with maritime incidents. The problem presented by flag of convenience countries is not confined to substandard ships. It is one that extends to substandard administration and management. These are contributory factors.
When a vessel sinks and seamen die, it is not necessarily an old rust bucket that has gone down. It may well be a ship that was built only a few years ago and equipped with the most modern aids. An investigaton will probably reveal that the equipment was not working properly. Alternatively, if it is found that it was working properly, it is likely that the men did not have the competence to operate it. These are some of the realities that lie behind the loss of vessels that are operated under a flag of convenience.
I was a seaman for 10 years, and I want all ships to meet a proper standard. However, the fault lies not only with substandard vessels; it extends to substandard administration and the substandard management of the companies involved, which are motivated by the desire to make a few bob. At the end of the day the issue is whether someone can make money for doing nothing and ignoring the consequences. That is the issue to which the UNCTAD conference is addressing itself.
I have been criticised for saying in the House that if Governments ignore their responsibilities to deal with the flag of convenience problem the unions will take action themselves. The unions have conducted a campaign against the practice for 30 years. There have been occasions when they have acted in defiance of the courts. In some instances their actions have been upheld by the courts. A relevant example is a recent judgment of Lord Denning. He supported union activities to try to prevent the exploitation of seamen. I note that the Government are preparing to change trade union legislation. Their purpose is to cripple the trade unions. They will do so in the name of correcting a problem that has been ignored for years.
My hon. Friend the Member for Hackney, Central spelt out in an excellent speech the issues that are raised by the operation of open registries. In 1954 the flag of convenience countries represented about one-quarter of 1 per cent. of world shipping tonnage. That was equivalent to about 7 million tonnes of shipping. By 1964 their share had grown to 13 per cent. In 1974 it had increased to 25 per cent. and represented 81 million tonnes. I understand that by 1979 it was 28 per cent. The size of the flag of convenience fleets has doubled in a decade. We may see by 1984 a trebling of the 1964 percentage of ownership of flag of convenience fleets. It is clear that the flag of convenience system continues to offer considerable attractions.
It is often said that opposition to the growth of flags of convenience amounts to a threat to traditional jobs. The

unions are concerned about the decline in jobs. They are also concerned about humanitarian conditions on flag of convenience ships. Ships have come to Humberside with two crews. The crews have been picked up in Africa. One crew has been working on the deck and another crew has been in the hold in the event of the first crew leaving the ship. On one occasion the British Government had to send a naval vessel to Humberside to prevent a mutiny. The captain of the ship concerned had two crews and he was not paying them. The crew that was in the hold broke out and went on the drink. The Liberian authorities could not send a Liberian naval ship to the vessel. It fell to the British Government to do so. Why was there nearly a mutiny? The situation got out of hand because there was no real regulatory control. There was no control of wages and no provision for sending crew members home.
We hear of workers being paid £10 a month when the ILO's recommendation is $110 a month. The shipping industry is the only industry which lays down what a minimum wage should be. It is recognised throughout the world that it is difficult to enforce the wages and conditions that trade unions negotiate. Many workers are intimidated. The intimidators are sometimes assisted by British immigration officers. If a captain finds that a man has been complaining, he may say "I am sending you off the ship." When the immigration officer arrives he is told "I want this man off. He is from Bangladesh. Get him back home." Our authorities strive to get the man on the first plane that will take him to his home country. When the trade unions have intervened there have been occasions when the immigration officers have realised that the circumstances amounted to an industrial dispute.
The majority of the Third world countries do not enjoy any real benefit from selling their flags. Liberia received about 10 cents a tonne in 1930. The same rate applied until 1979. I think that it was increased to 30 cents in 1980. Third world countries may have considered that the income from selling the flag was better than nothing, but it has not been a positive benefit in providing jobs for their seafarers or securing the normal associated economic activity that accompanies maritime fleets. There are one or two exceptions. It is evident that Singapore and Hong Kong have benefited, but countries such as Liberia have not.
One matter to which a great deal of attention has been paid is the safety record on those vessels, which is appalling. My hon. Friend the Member for Hackney, Central said that 70 per cent. of the losses this year were on flag of convenience fleets. Those included the Greek fleet, which is very much a flag of convenience fleet. There are a number of arguments to justify that.

Mr. Kenneth Carlisle: Does not the hon. Member agree that the Greek fleet has been not a flag of convenience fleet but a competitive and effectively-run fleet?

Mr. Prescott: There are times when the House openly shows its ignorance. I invite the hon. Member to read a report which I shall give him. Time does not allow me to go into all the arguments. Recently there has been an agreement by the Greeks to have Bangladesh and Asian labour on its fleet at about 50 per cent. of the going world rate. The argument of competitiveness was not involved in that. If the hon. Gentleman looks at the financial advantages offered by the Greek colonels for the Greek


fleet he will find that that was nothing to do with wage conditions and competitiveness. I shall give the hon. Gentleman statistical data. He should take not necessarily my data but the UNCTAD data, which will lead him to a different conclusion from the one which he has now posed. I shall now address my remarks to safety and the loss of vessels.

Mr. Austin Mitchell: The point about the Greek fleet is interesting. I remind my hon. Friend of the incident in which the "Atlantic Express" collided with the Greek-manned "Aegean Captain" off Tobago in July 1979? Both ships had unqualified, inadequately trained watchkeeping officers and the former ship had not carried out lifeboat drills for at least eight months. Twenty-four seamen lost their lives in the collision with a ship of the vaunted Greek fleet.

Mr. Prescott: That is a powerful intervention. We could give many more examples. There was one at Humberside last week when a vessel with a Greek skipper called, and there were the same problems with an Asian crew. Those people do everything they can to keep the unions off the ships if they believe that their conditions are being observed, as they did with Mr. Ken Turner last week. The unions have attempted to do all they can to intervene on behalf of the members on the vessels and to improve their conditions. Such conditions usually lead to a telephone call from someone on the ship, and to the unions to intervening and keeping a check on the matter. We demand not that the men are taken off the ships and that others are put on, but that they be paid a fair wage, which is lower than in some countries and higher than in others, but agreed internationally. We attempt to impose it on those ships.
It is interesting that the UNCTAD report given to the conference in Geneva uses the Lloyd's Register figures in reference to the loss of vessels. All of us in the House accept that that is a fair source of reference for the loss of vessels. The Liberian loss of vessels in 1970 was about 0·29 on the world average scale of loss of tonnage. In 1979 it had gone up to 0·85, which is almost three times the rate of the world loss. In 1970 it was double the rate of the average world loss. Therefore, we find Liberia's losses increasing even with all the Liberian inspectors who are talked about so much.
From the Lloyd's figures we find that, in open registry countries in general, in 1969, whilst they had 17 per cent. of the world tonnage, they lost 22 per cent. By 1978 they were responsible for 28 per cent. of the tonnage and had lost 49 per cent. Therefore, we find that the problem is becoming increasingly worse.

Mr. Kenneth Carlisle: Does the hon. Member agree that it is interesting that those figures change from year to year? He quoted Liberia in 1979. In the previous year Liberia's loss was half that of the world's average. Therefore, it depends on particular losses and years. It is not always the case that those countries have worse losses than the world average.

Mr. Prescott: I do not know the hon. Gentleman's experience with figures, but if he takes it in three-year periods and compares the figures for the earlier three years with the last three years, he should find the slumps even out. He will find the same trend. I do not have the mental agility to make the necessary calculations, hut, looking at

the figures, I can see that one could substantiate some of the arguments. I am sure that the hon. Member will have a chance to make his case later.
With the introduction of inspections and attempts to do something about the matter, there has been a small improvement in Liberia with regard to flags of convenience. I could show that with the statistics. Inspections make improvements. We know that too often in Liberia, when an inspector goes on board, that does not guarantee that a change in conditions will be imposed by the owners. There are many pressures in Liberia which mean that even if someone is disobeying the law the penalties are not so great. For example, a ship was lost in the Channel and 17 men were lost. A judge in Britain carried out an inquiry on behalf of Liberia and he imposed the maximum penalty against the officers involved, who did not have certification. The fine was about $700 and the captain was allowed to continue to sail. That is nothing like the consequences that a British seafarer or officer would face in such circumstances. Therefore, the deterrents under maritime law are not so great although inspectors may help to improve the situation.
My hon. Friend the Member for Kingston-upon-Hull, West (Mr. Johnson) said that a number of the rust buckets moved from Liberia to Panama and other countries. There were pressures from owners under Liberian flags who were trying to maintain good standards and who were against many of those rust-bucket companies. Those ships went to Panama and to other countries which were prepared to be less fussy about the obligations involved.

Sir Paul Bryan: Should not one compare losses of ships rather than gross registered tonnage, because the open registered vessels are nearly all bulk ships, which give them a greater tonnage? In the same document that the hon. Member quoted, I see that in 1980 40 per cent. of the 215 ships lost were FOC. Therefore, that seems to be a lower percentage.

Mr. Prescott: To which document is the hon. Member referring?

Sir Paul Bryan: The NUS report on flags of convenience.

Mr. Prescott: I was referring to the UNCTAD document.
I have looked at the figures for the numbers of ships and the percentage of tonnage. I am concerned to obtain a proper statistical analysis. For a flag of convenience vessel, the same analysis appears and it loses more, whether on numbers or tonnage. I am going back to five years ago. Liberia always argued at the time that it should be borne in mind that it had big ships, not small ships, and that, the analysis on a percentage was not fair. That argument is rather academic to a seaman on a coaster or a tanker who dies when it collides. I believe that that is a reasonable point in the argument. On my evidence, the same trend is shown. Lack of regulation means that more vessels are lost and more people die. There is a great argument for having a proper regulative force.
My argument about substandard management and administration has been used by the UNCTAD conference. It is a good argument, because it shows that many differences in the figures can be reflected not only in the standards of the vessels but in the quality of administration and management in the country concerned.
We in the unions are extremely pleased that we are not alone in our fight. Many countries are joining in. The report on the UNCTAD conference was a grave indictment against flags of convenience countries. It was not acceptable to Britain or to a number of group B countries—the Western developed countries—but in the main I believe that it was a powerful indictment. The report states that:
due to the lack of accountability of owners and the difficulty of identification, open registries create very favourable conditions for negligent, irresponsible and even criminal conduct by owners and key shipboard labour who all live outside the jurisdiction of the flag state and can thus avoid inquiry and prosecution.
Those few words sum up quite a comprehensive report, which is one of the many that the Minister referred to. It completely vindicates the action taken by the unions. The fleets' actions have been reviewed, as requested by the UNCTAD members ready for the Geneva conference. It was found extremely difficult to identify owners and to deal with the accountability and transparency of companies. It is said that that is also true in this country, but it is extremely difficult to identify the people responsible in flags of convenience countries.
The fiscal benefits shown in the report are not as great as many of us believed. I believed that it was solely a fiscal benefit, but the UNCTAD report shows an interesting fact, not from figures produced in Britain but from investigations by the American maritime administration. One cannot readily get such information. It appears that between 1971 and 1975 the scale of indirect subsidies through grants or fiscal benefits to the developed traditional marine countries has increased considerably. It is suggested that in 1971 the United Kingdom received 234 million, which was two-and-one-third times the average for other traditional maritime countries. In 1975 the figure was $386 million, which was only 50 per cent. more than the average.
Therefore, it is suggested that the fiscal advantages for Third world countries are not so great. I suspect that the traditional maritime countries have put pressure on their Governments, and said "If we are to compete against Third world countries and you want the red duster, you must help us with investment and shipbuilding grants." I am bound to say that the Labour Government went overboard, particularly with shipbuilding grants, without getting a great deal back, but that is another controversial argument.
The UNCTAD conference also looked at maritime social benefits and found considerable reluctance in the observance of the conventions on wages and social conditions. Ratification is all very well, but implementation is another matter. Countries can ratify details and undertake to carry them out, but if the ships do not come to the country the situation never arises.
I recall the controversy started by my union over the Cunard vessel that was going Third world and getting out of the British flag. I was attacked in my local paper by an officer of the ship from Hull. He stated that not allowing ships to sail under flags of convenience was against the interest of the officers. My argument was that if they encountered a problem they would find that sailing under a flag of convenience was against their interests.
This very week my hon. Friend the Member for Kingston upon Hull, West has taken the problem of a British officer to the Foreign Office. He was on a Panamanian ship in New Guinea, and is accused of being

connected with a collision. He has no money, and is threatened with gaol. He is in an extremely difficult position, and has no guarantee of any rights, such as being flown home, that he would have as a British seafarer.

Mr. James Johnson: May I intervene to thank the consular section of the Foreign Office for its magnificent work? It at once got in touch with Port Moresby. It has done a first-class job and allayed the fears of the officer's wife in Hull about his being in hospital and having no money.

Mr. Prescott: That is a classic example of the need for a proper Government maritime administration to intervene if a seafarer is in a difficult situation. The man is British, and Panama has done nothing. That is an important example.
We are concerned about the Government's attitude at the UNCTAD conference. It is said that the Government must reflect the industrial position. However, all too often industry feels that its position should be interpreted as being in the national interest, and that happens with a number of countries. When my hon. Friend the Member for Hackney, Central was in office he at least challenged certain of those traditional attitudes and asked whether we should automatically support a proposal just because the industry said that it was right. He waged a strong battle against entrenched thinking in the Department. Attitudes in the Department are all too often identical to those in industry.
There is considerable evidence that civil servants advising Ministers may the next day become officials advising shipowners. Government Departments are a nursery for people who then become advisers to the industry. Civil servants sit across the table, negotiating policy, from people who were their bosses, so it is easy to understand how industry's policies become identified as those of the Government, although that is often not in the best interests of the country.
No one can doubt that my hon. Friend did all that he possibly could in the infamous case of the "Gloptic Venus". He set up an inquiry. The shipowner hired a gang to charge on board and kick off men who were trying to get reasonable wages and conditions. It was a controversial matter in the House. Conservative Members condemned us for our policy. Some were members of the "Gloptic Venus" board, although they did not say so, so they undoubtedly supported its policy.
The owners' attitudes have been shown to be wrong in fundamental ways. It was hoped that IMCO would deal internationally with the social aspect of shipping policy, but the owners opposed that policy. The matter went to UNCTAD and backfired on it, as countries not necessarily concerned with maritime administration are now involved.
Britain refused to have any truck with controlling world-wide liner conferences. We took a hard line, and were dragged in by other European countries through an OECD formula, when the matter could have been worked out in the UNCTAD conference. We adopted a hard line because the shipowners told us to do so.
It now appears that we are taking the lead in adopting a hard line once more over the open registry, although I do not know how it is in our interests to do so. However, I have not noticed the shipowners being slow to take on Russia when it comes to a free market and interfering with our interests. They then say that competitive conditions are


being undermined. They call on the Government to interfere in the world market because they say that they are threatened by unfair competition. It is only when it comes to wages that the shipowners say that the world should decide fair competition.
Our view was not an easy one to take, but we believe in the Brandt report. The Third world should have its proper share, so we should legitimately give up part of that share. We cannot dominate shipping and expect other countries not to want a say in running it.
Group 77 was right to demand a share at the UNCTAD conference. It lined up with the Socialist group of countries against the hard-line attitude of developed Western nations. Even within the hard-line group of the Western nations, we begin to see that over the UNCTAD liner code Germany, Belgium and France could not defend the British position and wish to do a deal with the Third world. I know that there are selfish reasons involved concerning the size of the fleets, but the same is also happening about the open registry. France and others are not prepared to support the British position, and Britain is becoming the hard-line country in fighting against flags of convenience.
A few years ago, I should have wondered why. Indeed, I even wonder now why the Government take that attitude. In a previous debate the Minister suggested that the Government's policy was influenced by safety and national interests. The safety of flags of convenience shipping is bad, but I am not so sure about our national interest.
Our fleet comprised 25 per cent. of world shipping in 1950, and the figure had dropped to 6 per cent. in 1980. The size of the fleet has had greater consequences for seafarers than it has necessarily had for owners, and the reduction was not brought about simply by wages. The fleet's contribution to the balance of payments has declined. Shipowners have not done enough to help British shipbuilding. The number of seafarers' jobs declined from 133,000 in 1950 to 68,000 in 1980. That does not reflect the decline in our fleet, as there has been a greater decline in jobs than in tonnage.
The reason for this is not hard to find. Here we shall discover the essence of why the Government are leading the attack at the UNCTAD conference. There are the examples of Hong Kong and Bermuda, with exemptions to use our flag and at the same time employ cheap labour. Then there is the example of the Cayman Islands. I wrote to the Minister in April when a ship flying the British flag, registered in the Cayman Islands, went down with the loss of 17 men. I asked the Minister to give details of the certificate of competency, the crew involved and the inquiries taking place. Three months later, I am still waiting. Nobody has produced any answers. If a British ship had been lost with 17 men the House would be rightly indignant and would wish to know why there had been no inquiry. Indeed, I have reason to suspect that that ship may have gone down for good insurance reasons.
Such events did not occur only in the nineteenth century. Ships are still being sunk today, with their crews on board for the insurance money. There is no doubt about that. Indeed, there is a great deal of evidence to support that view. What is the House doing about a ship flying a British flag which went down with the loss of 17 lives? Those men may not have been British, but they were seamen. They were people, and their case is entitled to a hearing. Yet after three months we still have no answer.
The accountability of the flag is the main argument against flags of convenience. In that sense, however, the British flag is increasingly becoming a flag of convenience. We are making it easier to employ Asian labour at cheap rates. The Government have refused to implement the wage agreement agreed between the industry and the union, as my hon. Friend the Member for Hackney, Central said. There are therefore different wage rates on British ships. A black foreign seaman gets half the rate, a white seaman twice the rate. We hear much talk about race relations in the House, but the Government will not implement that agreement. Why not?

Mr. Eyre: Did that state of affairs apply before the general election in May 1979?

Mr. Prescott: A committee set up by my hon. Freind recommended that the wages should be paid. The Labour Government accepted that. The owners were reluctant to pay. Negotiations took place and the Government adopted the recommendation. We then asked for implementation. I have asked the Government whether they will implement it, but they are not prepared to interfere.
All these factors add up to the fact that the British flag has become a flag of convenience. We are now not so fussy about inquiries for some of our ships. Inspections are being cut, as the Minister knows, and the amount of money available to the Department for inspections has been cut. Our procedures are becoming slack. This reflects considerably upon the Government's position at the UNCTAD conference. Unfortunately, we are becoming just that kind of country.
The Minister said that there was no evidence to prove that regulation and genuine links with the flag lead to a reduction in accidents and loss of vessels. The Minister has only just taken up his post, so I am prepared to be charitable, as it is a complex matter, but I must tell him that he is wrong.
I take the example of Singapore. Once again, I refer to the figures from Lloyd's. In 1970, Singapore's loss of vessels was about five times greater than the world average. Singapore then decided to demand that there be an economic link between the flag and the country involved. It is no longer associated with flags of convenience in the same way and has made a statement to that effect. Its figures for loss of vessels are now 20 per cent. below the world average. Those figures speak for themselves. A genuine link with the country involved, with the responsibility to enforce internationally agreed standards, has an effect upon the loss of vessels and seamen. The Minister is therefore incorrect in what he says.
The reality is that the world market has failed to enforce proper standards. The insurance companies have gone for benefits and money rather than the enforcement of safety standards. The classification societies have become almost the handmaidens of some Third world countries without proper enforcement procedures, while the flag of convenience countries cynically take their money without any enforcement.
To that extent, therefore, if the Minister is embarking on strengthening flags of convenience countries and crippling the trade union movement which has the power to influence these matters—and has done so over the past 30 years—whether he changes the law or not we shall continue to pursue these matters because we believe that


it is morally right to do so. We shall still have the power to do this and we intend to do so. I put this to the Minister in all seriouness. If the Government are considering embarking upon such a course, I hope that they will take seriously what I have said. I hope that world relations will not have to be determined by strength, as all too often has been the case.
As seamen, we shall negotiate through UNCTAD. We know that there may be consequences for jobs—we are experiencing job losses now—but the Third world is entitled to its share. We shall play our part in that. I hope that the Government, who on this occasion took the unions with them at UNCTAD, for which I congratulate them, will rethink their policy and recognise what will happen, so that the Third world and British flag interests have their proper role in world trading relations.

Several Hon. Members: rose—

Mr. Speaker: Order. The debate has been proceeding since about 4.15. Three hon. Members only have spoken. A further eight hon. Members have a right to speak and are seeking to catch my eye. I remind the House that the debate will finish at 7 o'clock.

Mr. R. A. McCrindle: We have just listened to a passionate and rumbustious speech from the hon. Member for Kingston upon Hull, East (Mr. Prescott), which I at once concede reflected deeply held feelings on the part of the hon. Gentleman. I hope that he will not find it insulting if I say that I hope to approach the debate from a rather broader base than the interests of one section of the problem, which he rightly made the centre of most of his speech.
I congratulate the hon. Member for Hackney, Central (Mr. Davis) on giving us the opportunity to examine the matter of flags of convenience, not least because it is not quite the simple matter that it sometimes appears. The term "flag of convenience" is easily made the subject of vilification. There is often an assumption that it is somehow a simplistic matter and that by a stroke of the pen the Government could solve it. I hope to prove that that is a less than accurate assumption.
The burden of the hon. Gentleman's motion is threefold: first, that the Government opposed moves by UNCTAD to act against flags of convenience and are therefore to be criticised; secondly, that they voted against recommendations supported by the Third world and are therefore guilty of something approaching treachery against the less developed countries; thirdly, that they have no coherent shipping policy.
On the last point, the only evidence that the hon. Member for Kingston upon Hull, East adduced was that the National Union of Seamen wanted arbitration in the recent dispute and the Government had delayed it. With respect, I doubt whether that amounts to a condemnation of the Government's whole shipping policy. I feel that in many ways the motion is in itself far too sweeping and that the hon. Gentleman was guilty of selective quotation in putting his case to the House. He tended to overlook our own shipping interests.
It is incumbent upon the House to consider the whole matter rather more even-handedly and to try to assess just what are the interests of our shipping industry. In my view,

they are, first, to enable goods to be conveyed by sea with safety, speed and economy; secondly, to protect the economic interests of our shipping companies; and, thirdly, to maintain our own merchant marine without overlooking the economic constraints.
If I correctly analyse this country's shipping interests, and therefore imply the policy that the Government should pursue, our approach and that of UNCTAD are almost bound to be at variance. If we had totally accepted the UNCTAD approach it could only have increased the cost to shippers, by increasing the bargaining power of our seamen. It would not in the process have made safety at sea, which must be a concern of every hon. Member, more certain. On the contrary, had we transferred some of these responsibilities to Third world countries, with their manifest poverty, safety would have been affected adversely rather than favourably.
Few of us would deny that it should be an aspiration of any Government to be of assistance to the Third world. If that is our aim, shipping policy is not necessarily the best instrument. If safety is our goal, flags of convenience are arguably a better means of securing it than transferring the control of shipping to Third world countries. If we are afraid of British seamen's jobs disappearing, dealing with the flags of convenience issue is not the right way—it is certainly not the only way—to protect them.
Three other points can fairly be made at this stage in defence of the Government's approach, and they are germane. UNCTAD claims that owners of open registry ships are less accountable than the owners of other ships. There is no argument about that as regards registration in our own country, but there is a big question mark over Third world countries without the resources to maintain the necessary machinery of supervision.
Secondly, it has been overlooked that the Government support more rigorous enforcement, but not the abolition of the flags of convenience. By all means let us raise the standards under which flags of convenience operate, but that is very different from saying "Let us progressively phase out flags of convenience".
There has been no reference to the EEC, which has stated that open registry shipping appears to be beneficial to the economy of the Community and should not be phased out. Not every hon. Member accepts everything emanating from Brussels as the gospel truth, but we should not ignore the effect that the EEC considers the phasing out of flags of convenience would have on the economies of Western Europe.
I come now to the view of the International Chamber of Commerce. It is correct to quote the approach of international business men, just as the hon. Member for Kingston upon Hull, East was correct to put forward the point of view of the National Union of Seamen. The ICC is also opposed to the elimination of flags of convenience. It has argued that their abolition would harm Third world countries, just as UNCTAD and the hon. Member for Hackney, Central are combining to say the opposite. The ICC says that sharply raising freight costs would damage exporting Third world countries.
In other words, this is not a simple matter in which there is one argument. Other factors must be taken into account, and the hon. Member for Hackney, Central did not sufficiently take them into account. The ICC also says that abolishing flags of convenience would slow the growth of independent merchant fleets.
Additionally, on the question of safety, it has been pointed out that about 10 years ago one in 20 flags of convenience ships were unsafe or substandard. That is not a negligible figure. However, it is also contended, with figures issued by various bodies to prove it, that the number in that category is now negligible. Whereas in the past the safety standards of ships flying flags of convenience were a matter of extreme concern, and while they remain a matter for some concern, the tendency has been for matters to improve.
There are soon to be ratified international agreements on safety, which will bring added protection on flags of convenience ships. It is arguable that that is a better and more practical way of achieving the objective of the motion than moving towards the abolition of flags of convenience.
The House will know that I have some involvement in the world of insurance. I am tempted to pick up some of the points provocatively thrown across the Floor by the hon. Member for Kingston upon Hull, East. Like him in another context, I shall resist the temptation. Perhaps we can have a discussion later.
If I apply to Lloyd's or an insurance company in the City of London to insure a ship that sails under British standards the premium will probably be the lowest that I can obtain. I must confess that if the ship flies a Greek or Liberian flag the premium will be substantially higher. However, if it flies the flag of a Third world country that has just moved into the control of its own merchant marine the premium required will be—I am reliably informed—substantially higher than if it flew the flag of Greece or Liberia. Therefore, one must take a more balanced view than has so far been taken.
I can best summarise my view by simply sayng that I do riot believe that trade manipulation is the right way in which to help the Third world. Safety is best achieved by international conventions applying to all countries, including those flying flags of convenience.
I do not wish to ignore seamen. They live, and know that they live, in a highly competitive environment. They know that they are better served by increased productivity and efficiency than by old-fashioned protectionism, which appears to be the appeal of Labour Members.
I leave the last word to Mr. Michael Baily, in an article in The Times on 26 May this year, headed:
An attempt to scuttle the flags of convenience fleet".
Mr. Baily put it remarkably succinctly when he said:
Unctad, in applying its pressure, seems to be motivated not by the pursuit of the common good but by naked self-interest: the interest of its faithful supporters at the International Transport Workers Federation (ITF) which, if open registries were phased out, could get better wages and conditions under other flags; and the interest of developing countries in acquiring shipping rights and revenue by political means.
But there is no assurance at all that transfer of shipping to developing countries would make it safer, though cargo sharing would almost certainly make it costlier, to the detriment among others of the developing economies.
Desirable—indeed essential—as it may be to redistribute the world's wealth from rich countries to poor, this particular cure could turn out to be worse than the disease.
I believe that Mr. Baily correctly summarises the need for going very slowly before moving in the direction that the hon. Member for Hackney, Central would have us move, to the progressive abolition of flags of convenience.

Several Hon. Members: rose—

Mr. Speaker: Order. The Minister and the hon. Member for Hackney, Central (Mr. Davis), whose motion

is being discussed, have generously agreed that there should be no winding-up speeches. That means that there are 50 minutes left for the five hon. Members who remain in the Chamber to catch my eye. If they each take 10 minutes, each will be called.

Mr. James Johnson: I heard your comment earlier about short speeches, Mr. Speaker, so I began to decapitate mine. I shall make it mainly on the basis of two letters.
One of the letters was sent to me after an exchange in the Chamber with the Secretary of State for Trade on June. Because of the hubbub, the right hon. Gentleman did not quite hear all that was said, but he had the courtesy—he is a very courteous man—to send me a long letter, to which he added the following postscript
I don't think I would have dared a supplementary answer this long.
I regard what the right hon. Gentleman said as amazing, in view of what the Under-Secretary said at the beginning of this debate:
The future size of our fleet and its employment opportunities depend on its international competitiveness, including its labour cost competitiveness. I want to see a strong and competitive United Kingdom registry. But wage and manning negotiations are matters between the shipowners and the maritime unions, and it is for the shipping companies to take a commercial judgment on whether they can operate a ship profitably under the British flag. No one can be forced to operate a ship at a loss under the British flag. In these circumstances, the choice may he between an operator retaining a commercial interest in the ship under another flag, or the ship being sold with the loss of all connection with the United Kingdom. It is not for me to…pass judgment upon them. My Department makes strenuous efforts, in international fora and elsewhere, to defend the kind of free competitive market most conducive to the United Kingdom shipping and its job opportunities.
The inference that I draw from that is that in the view of the Secretary of State shipowners can and should make more money. But not only if losing a little or even a lot but perhaps even making ends meet, the Secretary of State then says that they should gain very much more. My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) put it in even more picturesque terms when he said that they were
motivated by a few bob".
Earlier the Under-Secretary of State said that 40 per cent. of our open register was due to flags of convenience. Perhaps he will say what percentage of our fleet is the other way about. Will he tell us, in other words, how many of our owners are deserting our flag and going over to the flags of convenience of such countries as Liberia? This is very important.

Mr. Eyre: I am not able to give the hon. Gentleman a precise answer now. I shall write to him about it. However, I remind him that I said earlier that the transfer of British registered ships to other flags was very rare. If British owners cannot operate their ships profitably, sometimes they sell them, but they have not transferred them to other registries. I shall write to the hon. Gentleman with pleasure.

Mr. Johnson: In the past, our shipowners—and our politicians, with names such as Macmillan—had a different policy about flags of convenience. There must be some missing factors here which account for this rather dubious theory which is now holding the stage.
My second letter was sent to me by a gentleman named Harold Lewis, who is secretary of the ITF—the international transport workers. He wrote:
The debate provides one of the few opportunities in the House of Commons to debate shipping matters and, above all, to focus attention on the flags of convenience device which has led to appalling exploitation, especially of Third World seafarers, and has had a disastrous effect on safety standards.
I do not imagine that any Minister will deny that.
I go to two Third world nations for the rest of my speech, and what better than Liberia, which casts a long shadow on any debate of this nature?
The National Union of Seamen has sent us all a magnificent document "Flags of Convenience: The Unacceptable Face of Shipping". It emphasises the part that Liberia plays. Over the years I have known the Liberian Government and people very well, since the days of my first meeting with President Shad Tubman, and I well remember conversations with Ambassador Dudley Lawrence, who for many years was a distinguished diplomat in Paris and later came to us in London. This was some years after the ILO campaign in the late 1950s, when Costa Rica withdrew from the flag of convenience business because of the efforts of the ILO.
I was discussing shipping with Ambassador Lawrence, and he said "But we are making efforts in Liberia to enforce standards. It is not quite fair to be labour my Government in this way." He was quite correct. The Liberian Government initiated a system of part-time inspectors in the early 1970s following much public dismay over tanker incidents in their own fleet, and the Liberian Bureau of Maritime Affairs was stirred up. Certain measures were passed. They were quite inadequate, of course. But there is no doubt that even if Third world nations enhance their standards and endeavour to lift themselves up to the levels about which we in the United Kingdom boast, they find that certain ships are taken away by their companies. That is what happened to Liberia.
That is why, earlier I put to the Minister the question that I did. If he persists in his views, does he not think that we shall sink deeper into the mud? Those nations which enforce standards will find their clients leaving them and going to other flags. I am afraid that I must concur with Professor Schmidt, of the University of Stockholm, who said, after a long, involved and detailed examination, that
vessels flying flags of convenience represent a form of capital which is not subject to social control".
That is one of the basic arguments put forward by all seafarers who go on deck on the seven seas. These people do not observe the rules of the game.
My last quotation is from Kenya. A year or two ago in Nairobi I was talking to the Minister of Finance. It was soon after independence. I have found that Third world nations are just as cynical as others, such as the United Kingdom and the United States, in their attitudes to commerce and finance. The Minister was musing quite seriously about Kenya becoming a flag of convenience State, like Panama and Liberia.
I understand the urgent need of these nations for aid and to get cash wherever they can. In a way, however, it is the same sort of ethic that Third world nations have when they issue new series of postage stamps. They wish to get

money from any quarter that they can, because they are so poor. But that is not for me to judge, or even for the Minister to judge.
There are many other so-called advantages to owners who fly flags of convenience. Wages can be lower, as the Minister knows. Hence they continue to have the flags of convenience, because they know that they are less likely to have to fight battles for better wages. The unions are less inclined to back up these men on the deck to get more money and better conditions.
All in all, it seems to me that the flag of convenience countries do not understand their national obligations to control the working conditions on vessels flying their flags. I hope that we are not being too smug, in the sense that what we do in the United Kingdom, Norway and other Scandinavian States is right. I understand why countries such as Liberia sell their flag to anyone on the high seas who wishes to avoid his financial obligations. It is because these countries are poor. If any of our people are taking advantage, shame upon us, because we do not need to do it. When, as my hon. Friend said, they are "motivated by a few bob" people of that sort should not be living in Yorkshire, Hull or London, because ultimately they will get themselves into all sorts of tangles.
For all those reasons I solemnly ask the Minister to change the Government's cold-blooded accountants' attitude in this matter, which I feel is somewhat patronising to us and to the Third world.

Mr. Neil Thorne: I listened with interest and respect to the speech by the hon. Member for Kingston upon Hull, East (Mr. Prescott). As an underwriting name at Lloyds, I must declare an interest in supporting his demands for safety at sea for men, cargoes and ships. However, we have alreadly been told that Liberia and Panama account for no less than 30 per cent. of world trade in shipping, having increased from virtually nothing to that figure in 30 years. During the same time, I understand that the United Kingdom's share has slumped from 24 per cent. to less than 7 per cent. Some of that decline must be attributable to inflexibility by the unions, the Government and management. Pious motions at Geneva will not reverse that decline.
The awful problem of domestic inflation in recent years has exposed us to world-wide competition in shipping, as it has in so many other industries, and we are now reaping the unpleasant fruit of unemployment. That can be seen in some measure from the wage rounds of the past five years. Since 1976 the increase on wages in United Kingdom ships has approached 100 per cent., which compares unfavourably with the remainder of the world.
The crisis which has affected United Kingdom shipping this year has been that increases of more than 12 per cent. have had to be conceded after millions of pounds were lost through the seamen's dispute. Management cannot, therefore, be blamed for seeking other ways of keeping together the expertise of those ashore and afloat. New ships cannot be built when insufficient revenue is earned to cover the enormous cost of replacement tonnage.
Countries with new-found wealth have the finance to build up sophisticated fleets. Such countries are selective in choosing managers for new ships, and manning costs under United Kingdom conditions are much higher than in other countries. Management knows that others do not


have sufficient expertise in the long run and that Third world countries consider that their nationals should have the opportunity to provide crews.
The Officers Association, which knows the job potential in ships which are not registered in the United Kingdom and that United Kingdom ships are built to the stringent requirements of Lloyds and the standards institutions, has decided to apply to the Secretary of State to be licensed under section 6 of the Merchant Shipping Act to recruit seafarers on behalf of United Kingdom companies and those managing offshore tonnage.
Some ships, no doubt, will be classified as sailing under flags of convenience, but they provide jobs at a difficult time. Many ships can be run within present management structures which are highly professional and ensure that the ships will be maintained to proper safety standards. Those serving in such ships are not misled by the propaganda of those who see something wrong with making a profit, which is the only way to protect jobs. They know that when costs are out of line, the remedy is always to sell. They realise that shipping is a tough industry facing fierce competition which the arch enemies of capitalism exploit to the full.
The need to retain a toehold and not to abandon an interest in the trade is paramount. One alternative is to transfer ships to a cheaper flag and to continue to operate them in the trade, but at a smaller cost. The benefit is twofold. Jobs and teams can be kept, and the prospect of replacement tonnage is more likely when profits are being made.
The present damage is great. I understand that 26 container ships can replace no fewer than 160 conventional ships. The problem can be solved only if those concerned accept the need for real productivity and achieve a more prosperous future in successful competition with the rest of the world.

Mr. Bruce George: No ocean or sea washes against my Walsall, South constituency; nor, I suspect, does it go anywhere near Ilford, Brentwood, Hackney or Birmingham, Hall Green. As an honorary grand admiral in the Nebraskan Navy, I feel a competence to speak and have as spurious and tenuous link with the sea as many owners of flags of convenience have with the nations with whom they are ostensibly registered.
My interests are in security and combating fraud. As a preliminary to my remarks, let me say that I support my hon. Friend the Member for Hackney, Central (Mr. Davis) in his attack on the Government. The extension of flags of convenience is jeopardising British jobs and is hampering Third world countries in the development of their fleets.
Despite the Minister's protestations, the safety factor cannot be ignored. In 1979, 48 per cent. of shipping casualties involved ships flying flags of convenience. When one takes it into account the fact that flags of convenience ships comprise 33 per cent. of the world's fleet one realises the enormity of the problem. As that excellent publication of the National Union of Seamen, "Flags of Convenience", says,
the FOC record was three times worse than the record of the traditional fleets in the period 1975–79. If Greece is excluded from the traditional fleet figures for this period, the loss rate for the traditional fleets is halved … with the FOC fleets becoming six times worse.
I am appalled at the exclusion of flags of convenience ships from many of the safety measures. So many of the major environmental catastrophes have involved ships flying flags of convenience, such as the Liberian "Amoco Cadiz", and the Liberian "Energy Concentration", which broke its back in July 1980, when all its cargo was discharged into the sea. There have been other disasters such as that involving the "Torrey Canyon"—a ship built in the United States, lengthened in Japan, nominally owned by a company in Liberia and registered in Bermuda. Great environmental disasters have been caused by ships flying what would be classed as flags of convenience.
I focus my short speech on one aspect— the incidence of maritime fraud. I am not arguing that ships registered with countries such as Liberia have a monopoly of criminals associated with them, but statistically the incidence of crime is higher with FOC ships. Maritime fraud is as old as the history of maritime commerce. One can go back to Roman times to see the skullduggery that was replicated by our Blackbeards, Captain Kidds and Henry Morgans.
The tradition of piracy has been changed by modern technology. The pirate has abandoned his skull and crossbones and his cutlass and traded them for a pinstripe suit and a telex machine. If he originates in the Middle East he will wear a lightweight summer suit. Many well-recorded incidents are just the tip of the iceberg involving companies registered in Liberia and Panama. The Hobbesian state of nature may not exist in ordinary society but it exists in the maritime world, where there is little regulation and the life of many seafarers is solitary, poor, nasty, brutish, and, in some cases, exceedingly short.
No country or ocean is immune from the problem of maritime fraud. However, it appears that one area is particularly susceptible—the Piraeus-Limassol-Beirut triangle. From some of the instances that I have come across, it seems to me that it would be better named "Pirateus". Cargoes disappear from those regions. Indeed, ships mysteriously disappear and, unfortunately, members of the crew, too. There are incidents where the ships go down and the crews miraculously survive. It seems that they are sometimes involved directly in the fraud that is perpetrated by some highly skilled people. Such people are
not necessarily skilled in maritime matters. They are people like myself, whose knowledge of the sea is confined to watching "The Onedin Line" or to taking weekend boat trips in my youth from Cardiff to Ilfracombe. One does not need to be an expert on the sea to be able to mastermind some sophisticated frauds.
The annual loss to the insurance companies, and indirectly to honest shippers and consumers, is more than $1 billion a year—enough to make the Captain Kidds of the old world almost blush with embarrassment at the small pickings with which they were involved. The profits for the pirates are obvious. Either the buyer does not get his cargo, or he pays twice for it. That increases the cost to the honest company. The insurers pay out. The shipping industry is forced to pay a higher premium. It is a disaster that the insurance industry recognises the problem but does little about it. Indeed, Governments have not considered the problem to the extent that they should.
There are many types of fraud, but documentary fraud is the simplest of all and can be carried out with an office and a telex machine. When we have a shipping industry, such as in Britain, that is still dedicated to the principle of


"My word is my bond", some unscrupulous people are able to capitalise on that honest and traditional approach and rip off others.
There is the charter party fraud, along the lines of documentary fraud, in that a charterer hires a small, aged vessel, pays a minimum hire charge, sells the cargo space, collects the freight charges, ensures that the vessel is ostensibly loaded, tells the person dealing with the ship that it is on the way, draws another payment, and then disappears.
Owners can arrange for their cargoes to be stolen from the docks. There is an Indian port where gangs offer themselves almost as legitimate agents and indulge in thieving from the harbour.
The worst kind of fraud is scuttling. There have been more than 50 such instances off the coast of Lebanon in the last few years. That fraud usually involves aged, over-insured rust-buckets that are deliberately sunk or blown up in order to collect the insurance money. It is an appalling practice. It is a fraud in which many shipping companies flying flags of convenience have been involved. In some cases the cargo is sold many times over. The practice is growing, and the situation is especially serious off Lebanon or in any war zone.
Such fraud can also be dangerous, not only for the people who perpetrate it. I know of one villain in respect of whom a Middle Eastern Government have put out a contract. If they catch him they certainly will not take him to court. A lot of blood has been lost as a result of frauds that have gone wrong. Many sailors have died.
A number of these frauds emanate from Liberia and, unfortunately, from Greece, which one might call a quasi-flag of convenience nation. One of the worst cases of piracy to come to light was the scuttling of the ship "Salem", which was registered in Liberia. The Solicitor-General for Liberia said that one of the captured men involved, "Captain" Georgeoulos—who has no maritime qualifications whatever—would be behind bars for 25 years. However, that man is now living in luxury in Greece. It is alleged that a large bribe was paid to a certain senior Government official in order to get him released. So much for improved standards in Liberia.
There are numerous instances of that kind. The problems are almost insuperable. It is difficult for prosecutions to prove their case. Corruption and bribery certainly keep a number of people out of court and goal. There is the problem of confused jurisdictions. There is also the problem of some countries not having the will to arrest this serious increase in fraud.
The insurance industry has a lot to answer for. We have listened to two hon. Members speaking on behalf of the insurance industry. I wonder whether they have spoken to the journalists who have spoken to me and said that in a way British insurance companies are assisting in crime by refusing fully to investigate frauds and cough up. It is much easier for insurance companies to pay out a small percentage of frauds than to cause any hassle, because if one does that one is likely to lose a contract.
I can give instances of where that has happened, and where companies that have investigated frauds have lost substantially as a result of their enthusiasm to investigate. That is the nature of the problem. The insurance companies should do more to stop such fraud.
I commend the IMCO report on preventive measures that Governments might adopt against maritime fraud. It says that Governments can do a great deal, such as adopting
an unequivocal national and international stand against maritime fraud;
more rigorous procedures for transferring ownership and transferring flags;…
support for the standardisation of maritime trading documents;…
a greater degree of co-ordination with other national Governments in pursuing the common goal of prevention;…
the ratification of the 1958 High Seas Convention …
the harmonisation of internal legislation with existing international legislation;…
the improvement of internal law enforcement resources and capabilities to prevent, detect and investigate incidents of maritime fraud.
I commend a new organisation, the International Maritime Bureau, based outside London, which I believe will do a great deal to cut down on seaborne fraud. However, this will involve co-ordinated action between Governments. It will also involve the shipper and the consumer of shipping services, who must be more discreet when hiring. Publicity is the answer. Some criminals operate with ships that are protected by flags that are supposedly legitimate, and there is certainly no monopoly of fraud among countries that sail flags of convenience fleets.
The statistics brought to my attention indicate that shippers from flags of convenience countries such as Liberia and Panama have a greater propensity to maritime fraud. I hope that the Government will do more than they have done to remedy this problem. It will never be eliminated—it is endemic in the system—but perhaps it can be reduced in terms of human justice, human lives, economy and efficiency.

Mr. Kenneth Carlisle: It is a pleasure to follow the hon. Member for Walsall, South (Mr. George), not least because he represents a constituency that is one of the furthest from the United Kingdom coastline. I assure him that his bluff and honest approach would make him suited to a seafaring life.

Mr. Prescott: But not to the wages.

Mr. Carlisle: There have been many attacks on flags of convenience. I should like to say why I believe that flags of convenience have a role to play, and why, if we were to abolish them without due consideration, we would do so at our own risk.
There would be various predictable effects. First, and perhaps most important, the main beneficiaries of abolition would be not the developing countries, which we wish to help, but the low-cost developed countries. One can argue that developing countries have neither the resources nor the skills to build up their own fleets.
Indeed, the example of Guinea is quite revealing. Guinea recently acquired two bauxite carriers, which have since been registered in Liberia. One can argue that flags of convenience provide a form of nursery for the developing countries which wish to build up their own fleets and that without such a relief they would not be able to do so.

Mr. James Johnson: Surely the hon. Gentleman should also include in that category nations such as Nigeria and Kenya?

Mr. Carlisle: One could include many developing countries in this category. I was merely taking Guinea as an example. I was arguing that a developing country does not necessarily have the resources or skills to build up its own fleet. Indeed, as I said, the low-cost developed countries would benefit most, and the United Kingdom is a reasonably low-cost developed country in shipping. Greece is especially so, and Greek costs are about 60 per cent. less than ours. Countries such as Greece would be the main beneficiaries of doing away with flags of convenience. The United Kingdom would not benefit. Thirty per cent. of our fleet is now foreign-owned and would have to leave the registry. Therefore, there would be an effect on us, and especially on jobs, which are particularly important at the moment. If our aim is to help developing countries and also to benefit ourselves, the right solution is not to abolish flags of convenience.
The second main reason why we should hold on to flags of convenience is that to abolish them would have a serious effect on trade. Flags of convenience provide a flexible and cheap means of shipping. They are a spur to an efficient and competitive shipping service. They maximise competition. They lead to lower freight rates. The developing countries need lower freight rates so that they can get their commodities to the West cheaply and efficiently.

Mr. Prescott: They do not say that.

Mr. Carlisle: It is often argued—especially by Labour Members—that the Brandt report's recommendation should be followed, but it is absolutely clear that the imposition of import controls—for which Labour Members also argue—is the one thing that would affect developing countries adversely and restrict their growth more than anything else. They want markets in the developed counties. Similarly, the abolition of flags of convenience would lead to much more expensive exports from the developing countries to the developed countries and would be of no long-term benefit to the very countries which Labour Members claim that they wish to support.
The third argument for flags of convenience is based on safety. We all recognise that this is a supremely important matter. The evidence shows that both Conservative and Labour Governments know that this is vital. This is shown by our record. The figues have been mentioned by the Minister, but they are worth reiterating. The United Kingdom's percentage losses over the past nine years have been one-quarter of the world average. The Government would not stomach flags of convenience if the safety record were much worse. The evidence shows that, although the record is worse, it is not much, worse. We have had an argument over Liberia, but the facts show that Liberia's record is not significantly worse than that of other countries—

Mr. Prescott: At least three or four times.

Mr. Carlisle: —in the West, especially Greece. The best and most effective way to improve safety is by State control at the ports. Here, again, the United Kingdom's record is worth repeating. The number of foreign vessels inspected has increased. In 1979, we inspected 615. In 1980, the figure more than doubled to 1,300. Therefore, the degree of control which flag States choose to exercise depends very much on the country's willingness to do so.
The Opposition are seeking to impose restrictions on shipping without thinking through the effects of such

restrictions. If flags of convenience were abolished, without doubt the cost of world shipping would go up and, therefore, the costs of exports and imports. This would particularly impede developing countries. It would not help developing countries to build up their merchant fleets. As I have said, the main beneficiary has been Greece. Nothing significant would be done to improve safety.
The motion, like so many motions tabled by the Opposition, has very good intentions, but it is ill-founded. It has not been properly thought through, and it will not help those people for whom, quite rightly, both Opposition and Conservative Members care. Hon. Members on each side of the House have an interest in helping and nurturing developing countries. Therefore, no case has been made out for the thoughtless action that is proposed.
One of the lessons that all Governments can learn is that it is wrong to disrupt something for dogmatic or intellectual reasons if it is working well. We often end up with something much worse. The current system although it could be improved in many ways, is working reasonably well. The Government would be foolish to interfere drastically with it.

Mr. Austin Mitchell: I shall not try to follow the hon. Member for Lincoln (Mr. Carlisle), whose logic seemed to be as landlocked as his constituency.

Mr. Kenneth Carlisle: The city of Lincoln has long been an important port and is still connected with the sea.

Mr. Mitchell: The connections between Lincoln and the sea, and between the hon. Gentleman's speech and logic, are tenuous. His argument was that flags of convenience helped Third world countries. That assertion contradicts the report of the UNCTAD secretariat, which argues that there is no profit to Third world countries in selling their flags in this kind of fashion.
The hon. Gentleman argued that the safety record of the countries concerned is good. I have the figures for 1975 to 1979 of the percentage of ships lost each year. For Cyprus, the figure is 2·7 per cent., for Liberia it is 0·54 per cent., for Panama it is 1·8 per cent., and for Greece it is 1·3 per cent. Those figures have to be compared with the figure of 0·4 per cent. for Western Europe. The rates of losses of those countries are substantially higher.
Most Conservative speakers in the debate have come from landlocked constituencies. Grimsby, on the other hand, has a close and real interest in the subject. As a major port it has a great interest in shipping and in the effective control of pollution. Indeed, it has a direct interest in the debate, in view of the transfer, four weeks ago, of the "Cicero", a Wilson line ship. I understand that Government grants had been made available for the building of that new ship, which was transferred to a flag of convenience company in the Cayman Islands. That move put the merchant seamen on the "Cicero'. out of work. The debate is concerned with the loss of jobs that follows that kind of transfer.
It is a distressing spectacle to see British shipping companies effectively becoming management companies—almost multinationals—by putting their own ships under flags of convenience and concentrating on management. It is equally distressing to see the British Government leading the defence of that kind of process and defending flags of convenience, which clearly work


against British national interests. Flags of convenience, and the massive transfer to them, gnaw away at the national interest, at British fleets and at British jobs. The Government are effectively acting as the spokesmen of financial interests and are leading the defence of this kind of process.
We have the equally distressing spectacle of a Government who have destroyed so many jobs in the last two years now accusing the unions of destroying jobs by their attack on flags of convenience. This is a monstrous piece of "doublespeak" for a Government such as this one.
The flags of convenience issue is important because of the problems that we shall face as a country over the next few years. The problems are essentially those of national regeneration and national rebuilding. That means not only rebuilding British industry and the capacity to produce, but rebuilding the British shipping fleet, with industry and the fleet taking the power to control their own destiny, instead of seeing it steadily handed over as it has been in the last few years, particularly by the massive transfer of vessels to flags of. convenience. We have seen British tonnage decline by one-third since 1975. That is a process that must be stopped as part of the national process of rebuilding, which it now seems will fall to the Labour Party when it comes into office after the next general election.
The reason for the transfer to flags of convenience is the simple one of penny pinching, cheap-jacking, labour exploiting, cost cutting and duty dodging to save money. It is simply a financial argument by British companies transferring vessels as has been the case over the years when vessels have been registered under flags of convenience. It is distressing to see the British Government backing that kind of process. The Minister was reduced today to becoming an apologist for Liberia, instead of being a defender of British interests. If he sees himself as defending British interests, I must tell him that what he is defending are financial interests and not the interests of British jobs, British ships and the British shipping industry. He is defending the manipulation under which vessels are transferred to flags of convenience.
To compensate for failures of management and to keep up with modern trends and to innovate, British owners have been trying to recoup profits by switching to flags of convenience. From 1978 to 1980 the United Kingdom fleet declined by 13 per cent., while the United Kingdom-owned flag of convenience fleet increased by 52 per cent. The basic motive is greed and financial opportunism. Like all operators of flags of convenience, they are gaining from short-cuts on safety standards.
Contrary to the figures produced by the hon. Member for Lincoln, 70 per cent. of the tonnage lost from 1975 to 1979 was flag of convenience or Greek registered. The loss amounts to one ship in 75 each year. In the case of Cyprus-registered vessels, it was one ship in 36, as opposed to one ship in 229 for the rest of the world. That represents a three-times-worse loss record than traditional fleets. If one excludes Greece from traditional fleets, the loss record is six times worse. The record is compounded by unqualified crews and inadequate officers, due to the fact that there are no facilities for training. These vessels are essentially parasitic on nations such as Britain and the British shipping industry for the training that is provided. Crews are recruited to provide cheap labour for these vessels.
I should like to refer to the revelations in the study by the German journalist Christian Jungblut, whose researches show clearly the extent of bribery, corruption and forgery in obtaining Panamanian certificates. The study shows how he himself got a certificate for a first mate's licence by those means. He describes how he was able to get aboard a ship, "Aladdin B", where the lifeboats were rusted fast, where the course was altered, where oil sludge was pumped over the side off South Carolina, and where a duplicate log was prepared for the United States coastguard and the original log kept in pencil. That is the kind of practice that takes place under flags of convenience.

Mr. George: Is my hon. Friend aware that in Piraeus, in Greece one can hire lifeboats before an inspection takes place and then send them back? It is a pretty rampant practice.

Mr. Mitchell: I am appalled to hear what my hon. Friend says. If it indicates what is happening, it is truly appalling.
An interesting document, "Flags of Convenience", issued by the National Union of Seamen, describes the experience of one vessel, the "Argo Merchant"
which was built in 1953 and seems to have had an uneventful career until 1967 when the ship took eight months to sail from Japan to America. It collided with a Japanese ship, caught. fire three times and had to stop for repairs five times. In 1968 there was a mutiny and in 1969 it went aground off Borneo for thirty-four hours. In the next five years it was laid up in Curacao, grounded off Sicily and towed to New York. In 1976 the boilers broke down six times and it once travelled showing two red lights, indicating that the crew could no longer control the ship's movements because steering and engine had failed. The ship was banned from Philadelphia, Boston and the Panama Canal. Later in 1976 it ran aground and sank off Cape Cod, depositing the USA's largest oil slick. Prior to grounding the ship had been `lost' for fifteen hours, the crew was eighteen miles off course and navigating by the stars, because modern equipment had broken down. In addition, the West Indian helmsman could not read the Greek handwriting showing the course to be steered. A naval expert afterwards described the ship as 'a disaster looking for somewhere to happen'.
That is the kind of practice that we are asked to condone in condoning flags of convenience. Vessels are registered under these flags because they can get away with practices such as I have read to the House, through inadequate inspection, lower crewing and staffing levels and inadequate controls.
The escape from the present situation is difficult to foresee. It cannot be achieved by persuasion. The Minister gave examples of improved inspection of Liberian vessels. What happens is that Liberian registered vessels transfer to Panamanian registrations. There is a massive increase in Panamanian registrations as a result of improved inspection in Liberia. The process cannot be achieved on a one-by-one basis as the Minister indicated. Nor will inspection by the port State prove the answer.
In that situation, the Government are attempting to cut down the amount of money given to the Department of Trade marine services budget. I see that the Estimates show a reduction from £25 million in 1980–81 to £10 million in 1984. Out of that amounts come funds for inspection and surveying and the grant to IMCO. If that is how this country is cutting down expenditure, port State inspection will not help. The only answer is for the Government to support proposals to phase out flags of convenience by insisting on a requirement that ships registered in national registers should have a genuine


economic link with the country in which they are registered. For the British Government to take up any other position is derogatory to national interest, to Britain's future and to our ability to control our destiny.

Mr. Clinton Davis: Hon. Members have heard the indictment of the "Argo Merchant". For the hon. Member for Lincoln (Mr. Carlisle) to argue that the situation is working reasonably well suggests that the hon. Gentleman is generous to a fault, particularly if it is his own. The debate has made it patently obvious that the Government's defence of their position has been ragged, tacky and disreputable. The debate has established that what really talks is money. That is the prime thing. In speech after speech by my hon. Friends the flag of convenience has stood condemned as a concept, and condemned in the same way as presidents of the Chamber of Shipping and Governments of the same persuasion as that of the Minister sought to condemn the flag of convenience not long ago.

Mr. Eyre: The hon. Member for Grimsby (Mr. Mitchell) did not come to the point that I should like to mention. If it is said that the British flag is a flag of convenience, does the hon. Gentleman contemplate that the 40 per cent. of the shipping tonnage that is foreign-owned will be compelled to leave the British flag? Has he realised the consequences for jobs in British ships?

Mr. Davis: That is an extremist point of view, adopted by the Government for their own convenience in seeking to decry the UNCTAD resolution. It is a shabby excuse, which does not wash. The Government should apply their mind to a consideration of the realities. They should say that they respect the views of the Third world and that they understand the dissatisfaction that exists with the present position. They should say that they believe that they should align themselves with that thinking and the entitlement of the Third world to a more equitable share of world trade. This relates to the whole argument about Brandt, in respect of which the Government stand starkly condemned. I have no hesitation in asking the House to support the motion.

Question put:

The House divided: Ayes 132, Noes 170.

Division No. 246]
[7 pm


AYES


Allaun, Frank
Craigen, J. M.


Anderson, Donald
Cryer, Bob


Ashton, Joe
Cunliffe, Lawrence


Atkinson, N.(H'gey,)
Cunningham, Dr J. (W'h'n)


Barnett, Guy (Greenwich)
Davidson, Arthur


Beith, A. J.
Davies, Rt Hon Denzil (L'lli)


Bidwell, Sydney
Davis, Clinton (Hackney C)


Booth, Rt Hon Albert
Dean, Joseph (Leeds West)


Boothroyd, Miss Betty
Dixon, Donald


Bradley, Tom
Dobson, Frank


Bray, Dr Jeremy
Douglas, Dick


Brown, Ronald W. (H'ckn'y S)
Dubs, Alfred


Buchan, Norman
Dunn, James A.


Callaghan, Jim (Midd't'n &amp; P)
Dunwoody, Hon Mrs G.


Campbell-Savours, Dale
East ham, Ken


Canavan, Dennis
Edwards, R. (W'hampt'n S E)


Clark, Dr David (S Shields)
Ellis, R. (NE D'bysh're)


Cocks, Rt Hon M. (B'stol S)
English, Michael


Coleman, Donald
Evans, John (Newton)


Concannon, Rt Hon J. D.
Faulds, Andrew


Conlan, Bernard
Flannery, Martin


Cook, Robin F.
Ford, Ben


Cowans, Harry
Foulkes, George


Cox, T. (W'dsw'th, Toot'g)
Fraser, J. (Lamb'th, N'w'd)





Garrett, John (Norwich S)
Mulley, Rt Hon Frederick


Garrett, W. E. (Wallsend)
O'Neill, Martin


George, Bruce
Orme, Rt Hon Stanley


Ginsburg, David
Palmer, Arthur


Golding, John
Park, George


Gourlay, Harry
Parker, John


Graham, Ted
Penhaligon, David


Grant, John (Islington C)
Powell, Raymond (Ogmore)


Hamilton, James (Bothwell)
Prescott, John


Hamilton, W. W. (C'tral Fife)
Radice, Giles


Harrison, Rt Hon Walter
Richardson, Jo


Hattersley, Rt Hon Roy
Robertson, George


Haynes, Frank
Ross, Ernest (Dundee West)


Healey, Rt Hon Denis
Rowlands, Ted


Heffer, Eric S.
Sheldon, Rt Hon R.


Hogg, N. (E Dunb't'nshire)
Shore, Rt Hon Peter


Holland, S. (L'b'th, Vauxh'll)
Silkin, Rt Hon J. (Deptford)


Hooley, Frank
Silverman, Julius


Hughes, Robert (Aberdeen N)
Skinner, Dennis


Hughes, Roy (Newport)
Smith, Rt Hon J. (N Lanark)


Jay, Rt Hon Douglas
Snape, Peter


Johnson, Walter (Derby S)
Soley, Clive


Jones, Rt Hon Alec (Rh'dda)
Spearing, Nigel


Kaufman, Rt Hon Gerald
Spriggs, Leslie


Kerr, Russell
Steel, Rt Hon David


Leighton, Ronald
Stoddart, David


Lewis, Ron (Carlisle)
Straw, Jack


McDonald, Dr Oonagh
Summerskill, Hon Dr Shirley


McGuire, Michaeiy (Ince)
Thomas, Dafydd (Merioneth)


McKay, Allen (Penistone)
Tinn, James


McKelvey, William
Urwin, Rt Hon Tom


McWilliam, John
Varley, Rt Hon Eric G.


Marks, Kenneth
Wainwright, R.(Colne V)


Marshall, Dr Edmund (Goole)
Watkins, David


Martin, M(G'gow S'burn)
Welsh, Michael


Maynard, Miss Joan
Whitehead, Phillip


Meacher, Michael
Wilson, Gordon (Dundee E)


Mikardo, Ian
Wilson, William (C'try SE)


Miller, Dr M. S. (E Kilbride)
Winnick, David


Mitchell, R. C. (Soton Itchen)
Woolmer, Kenneth


Morris, Rt Hon A. (W'shawe)



Morris, Rt Hon C. (O'shaw)
Tellers for the Ayes:


Morton, George
Mr. Robert C. Brown and


Moyle, Rt Hon Roland
Mr. James Johnson.




NOES


Alexander, Richard
Clark, Hon A. (Plym'th, S'n)


Ancram, Michael
Clark, Sir W. (Croydon S)


Baker, Nicholas (N Dorset)
Clarke, Kenneth (Rushcliffe)


Beaumont-Dark, Anthony
Clegg, Sir Walter


Bendall, Vivian
Cockeram, Eric


Benyon, Thomas (A'don)
Colvin, Michael


Benyon, W. (Buckingham)
Cope, John


Berry, Hon Anthony
Costain, Sir Albert


Best, Keith
Cranborne, Viscount


Biffen, Rt Hon John
Dean, Paul (North Somerset)


Biggs-Davison, John
Dover, Denshore


Blackburn, John
du Cann, Rt Hon Edward


Body, Richard
Dunn, Robert (Dartford)


Bottomley, Peter (W'wich W)
Dykes, Hugh


Boyson, Dr Rhodes
Eggar, Tim


Braine, Sir Bernard
Emery, Peter


Bright, Graham
Eyre, Reginald


Brinton, Tim
Fairgrieve, Russell


Brittan, Leon
Faith, Mrs Sheila


Brooke, Hon Peter
Farr, John


Brown, Michael(Brigg &amp; Sc'n)
Fell, Anthony


Bruce-Gardyne, John
Fenner, Mrs Peggy


Buchanan-Smith, Alick
Finsberg, Geoffrey


Buck, Antony
Fisher, Sir Nigel


Budgen, Nick
Fletcher-Cooke, Sir Charles


Bulmer, Esmond
Fookes, Miss Janet


Burden, Sir Frederick
Fraser, Peter (South Angus)


Butcher, John
Gardiner, George (Reigate)


Cadbury, Jocelyn
Garel-Jones, Tristan


Carlisle, John (Luton West)
Goodhew, Victor


Carlisle, Kenneth (Lincoln)
Goodlad, Alastair


Carlisle, Rt Hon M. (R'c'n)
Grant, Anthony (Harrow C)


Chalker, Mrs. Lynda
Gray, Hamish


Chapman, Sydney
Greenway, Harry






Griffiths, E.(B'y St. Edm'ds)
Neubert, Michael


Griffiths, Peter (Portsm'th N)
Newton, Tony


Grist, Ian
Osborn, John


Gummer, John Selwyn
Page, John (Harrow, West)


Hamilton, Hon A.
Page, Rt Hon Sir G. (Crosby)


Hannam, John
Page, Richard (SW Herts)


Hawkins, Paul
Pattie, Geoffrey


Hawksley, Warren
Percival, Sir Ian


Hayhoe, Barney
Prior, Rt Hon James


Heddle, John
Proctor, K. Harvey


Henderson, Barry
Rees, Peter (Dover and Deal)


Higgins, Rt Hon Terence L.
Rees-Davies, W. R.


Hill, James
Rhodes James, Robert


Hogg, Hon Douglas (Gr'th'm)
Roberts, M. (Cardiff NW)


Howell, Rt Hon D. (G'ldf'd)
Roberts, Wyn (Conway)


Hurd, Hon Douglas
Rost, Peter


Jenkin, Rt Hon Patrick
Silvester, Fred


Jessel, Toby
Skeet, T. H. H.


Jopling, Rt Hon Michael
Speed, Keith


Joseph, Rt Hon Sir Keith
Speller, Tony


King, Rt Hon Tom
Spicer, Jim (West Dorset)


Lang, Ian
Spicer, Michael (S Worcs)


Langford-Holt, Sir John
Sproat, Iain


Lawrence, Ivan
Squire, Robin


Le Marchant, Spencer
Stainton, Keith


Lennox-Boyd, Hon Mark
Stanbrook, Ivor


Lester, Jim (Beeston)
Steen, Anthony


Lewis, Kenneth (Rutland)
Stevens, Martin


Lloyd, Peter (Fareham)
Stewart, Ian (Hitchin)


Loveridge, John
Stewart, A.(E Renfrewshire)


Luce, Richard
Stradling Thomas, J.


Lyell, Nicholas
Taylor, Teddy (S'end E)


MacGregor, John
Temple-Morris, Peter


McNair-Wilson, P. (New F'st)
Thomas, Rt Hon Peter


Madel, David
Thorne, Neil (Ilford South)


Major, John
Townend, John (Bridlington)


Marland, Paul
Trippier, David


Marlow, Tony
Viggers, Peter


Marshall, Michael (Arundel)
Waddington, David


Mates, Michael
Wakeham, John


Maude, Rt Hon Sir Angus
Walker, B. (Perth)


Mawby, Ray
Waller, Gary


Mawhinney, Dr Brian
Warren, Kenneth


Maxwell-Hyslop, Robin
Watson, John


Meyer, Sir Anthony
Wells, Bowen


Miller, Hal (B'grove)
Wheeler, John


Mills, Iain (Meriden)
Wickenden, Keith


Mills, Peter (West Devon)
Winterton, Nicholas


Moate, Roger
Wolfson, Mark


Morgan, Geraint



Morrison, Hon P. (Chester)
Tellers for the Noes:


Murphy, Christopher
Mr. Robert Boscawen and


Neale, Gerrard
Mr. Donald Thompson.

Questions accordingly negatived

WAYS AND MEANS

Tobacco Products

The Chief Secretary to the Treasury (Mr. Leon Brittan): I beg to move;
That as respects any time after 7th July 1981 the Resolution of the House (Tobacco products) of 16th March shall have effect with the substitution for £18·04, £34·29, £29·56 and £21·92 of £19·03, £35·91, £30·96 and £22.96 respectively.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
The purpose of the resolution is to increase the taxation on cigarettes and other tobacco products by amounts that would yield an additional revenue of £65 million in this financial year and £95 million in a full financial year. Together with the increases we propose in the betting gaming taxes, this will restore the revenue lost as a result of the reduction of 10p per gallon on the tax on derv, following the amendment that my right hon. and learned Friend the Chancellor of the Exchequer advised the House to accept in the Finance Bill Committee on 30 April.
The Opposition would, of course, argue that it is unnecessary to recoup the revenue. The right hon. Member for Stepney and Poplar (Mr. Shore) last Thursday described my right hon. Friend's proposals as being "trivial" and "entirely political".
On one point at least the right hon. Gentleman and those in industry would undoubtedly differ. I do not think that industry would accept for one moment that the reduction in the derv duty could be regarded as trivial. It provides a welcome relief for business transport costs, the effects of which will be widely spread. The issues are, therefore, whether it is right to meet the costs of that relief in some other way, and whether the proposals put to the House for raising the necessary revenue are fair and reasonable.
The House will recall that in showing his readiness to accept the derv amendment on 30 April the Chancellor made it clear from the outset that he would have no option but to ask the country to pay the cost of that relief in some other way. He said that in considering the range of possible ways to do this he would take account of what was said in the debate and bring proposals before the House in due course.
That is what has happened. In presenting the Budget, my right hon. and learned Friend made it clear that monetary and fiscal restraint remained essential to the success of the Government's strategy of defeating inflation and thereby securing the conditions for sustainable growth of output and employment. It is on that basis that we judged that we should budget for a public sector borrowing requirement of £10½ billion. The Chancellor's view is that nothing has happened since that date to invalidate that judgment.

Mr. D. N. Campbell-Savours: The Chief Secretary says that nothing has happened since that date to invalidate the judgement. Has he seen the report published at the weekend by the City stockbrokers Buckmaster and Moore? All hon. Members, including the right hon. and learned Gentleman's hon. Friends, want to hear from him whether that report is correct. We should like to be told whether, in the light of that report, the Chief Secretary believes that the Treasury's statistics are valid.

Mr. Brittan: The House is aware that a welter of reports on the economy are produced by stockbrokers and others. It is not customary to comment on them and it would not be appropriate for me to comment on the figures produced in one such report.

Mr. John Bruce-Gardyne: Can my right hon. and learned Friend assist the House on another point? The Chancellor of the Exchequer predicted in the Red Book a yield of £500 million in the current year from the increase in tobacco duty in the Budget. We are through one quarter of the year. Are we on schedule? Have we collected to date £125 million or a smaller amount from the increased duty?

Mr. Brittan: Broadly, the estimate has not changed, and on that basis my right hon. and learned Friend believes that the essential Budget judgment should not be altered. That is why the motion is before the House.
The right hon. Member for Stepney and Popular has argued that the cost of the derv change is so small and the margins of error surrounding any forecast of the PSBR is so great that even if one accepts the essential Budget strategy it is not necessary to seek to recoup the revenue that has to be forgone as a result of the reduction in the derv tax.
The scornful phrase that the right hon. Gentleman chose to describe our proposals was "fine fiscal tuning". Whatever the validity of the criticism of the Government's engaging in fine fiscal tuning, it does not come well from a member of a Government who introduced as many Budgets and mini-Budgets as did the Labour Government when the right hon. Member for Leeds, East
(Mr. Healey) was Chancellor of the Exchequer.

Mr. Austin Mitchell: The Chief Secretary criticises my right hon. Friend the Member for Leeds, East (Mr. Healey) for introducing mini-Budgets. But what is this? Is it a mini-Budget? Why is the Chancellor of the Exchequer not here to tell us? The whole process looks suspiciously like a mini-Budget.

Mr. Brittan: The hon. Gentleman must have been so busy in his duties as a Whip on the Finance Bill Committee that he did not notice the nature of today's exercise. The hon. Gentleman was assiduous, but when my right hon. and learned Friend agreed to the reduction in the derv tax he made it clear that because he did not think that a change in the Budget strategy was called for it was appropriate that there should be a recoupment of the revenue lost by reducing the duty on derv, and he said that he would consider the form which that recoupment should take.
Within the context of the Budget judgment as a whole, I am dealing with the question whether it is appropriate to engage in the recoupment that is the subject of this resolution and others on the Order Paper. As I said, although some no doubt believe that fiscal fine tuning is an inappropriate activity, such criticism does not lie well in the mouth of the right hon. Member for Stepney and Poplar, in view of the frequncy with which the right hon. Member for Leeds, East made such proposals when he was Chancellor of the Exchequer. The truth is that we accepted that it was right that the derv change should be made, the cost of which is £85 million. It is no more than proper that we should seek compensation in alternative forms of taxation. Nobody is pretending that the forecast of the public sector borrowing requirements is so precise that, on

the basis of experience, we can pinpoint it to that order of magnatitude. I note that I carry the right hon. Member for Ashton-under-Lyne (Mr. Shelton) with me on that point, if on no other.
It does not follow that because there are substantial margins of error when a change involving a reduction in the revenue is accepted by the Government and the House, nothing should be done to recoup the loss and that we should simply throw our hands in the air and say "We do not know how it will turn out in the end, so we shall leave it." On that basis it would be impossible to take a view of what the proper level should be. It is right that the Government should return to the House, as we have said all long we would do, and put forward proposals for recoupment. I seek to persuade the House that the proposals are a balanced, fair and reasonable package.
I turn to the detail of the resolution. The rate of specific duty on cigarettes is increased from £18·04 to £19·03 per 1,000. After consequential ad valorem duty and VAT has been taken into account, that is equivalent to 3p on a packet of 20—an increase in the duty burden of just under 5 per cent. The duty on other tobacco products—cigars, pipe tobacco and hand-rolling tobacco—is increased by a similar percentage. If the House approves the resolution, all those changes will come into effect at midnight tomorrow. They raise a total of £65 million in 1981–82 and £95 million in a full year. The effect on the retail price index will be an increase of just over one-tenth of 1 per cent.

Mr. Jim Craigen: I wish to refer to a point raised earlier by the hon. Member for Knutsford (Mr. Bruce-Gardyne). When the Treasury considered alternative sources to meet the shortfall in derv tax what consideration was given to the employment implications in the tobacco industry?

Mr. Brittan: That matter was taken into account. I shall refer to it in a moment.
We do not think it unreasonable to ask smokers to contribute the greater part of the revenue needed to offset the den, duty reduction. The real value of the duty on cigarettes has fallen substantially from past levels and this increase, together with the larger increase that my right hon. and learned Friend imposed in the Budget, goes only part of the way to restore the position. The duty on king-size cigarettes in real terms will now be broadly the same as in early 1976. It will be below the levels of 1974, 1975 and some earlier years—levels which, no doubt, were thought by those who served in the Administration in power then as being entirely reasonable. We are no more than back to those levels.
The further 3p increase that we are putting before the House comes on top of the 14p which my right hon. and learned Friend added to the taxation of cigarettes in the March Budget. As I said, that goes only part of the way to restoring the past real value of the duty. It is significant that the total increase in cigarette taxation since the March 1980 Budget, resulting from the March 1981 changes, the changes that we are now debating and the additional ad valorem duty and VAT resulting from the manufacturers' price increases at the beginning of this year, is 36 per cent. That is less than the 38 per cent. Budget increases which were necessary in the duties on beer and petrol. It is the same as the 36 per cent. increase in the tobacco duty—which was then charged by weight—imposed by


the right hon. Member for Leeds, East in one go in his April 1975 Budget. It is substantially less than the 54 per cent. imposed by the late Dr. Hugh Dalton in 1947. Any suggestion that the percentage increase in tobacco duty on this occasion is disproportionate or unfair, or bears unreasonably on any particular section of the community, is difficult to support if we consider the action taken by the Labour Government and their predecessors long ago.
The hon. Member for Glasgow, Maryhill (Mr. Craigen) raised the question of the state of the tobacco industry and its employment prospects. We certainly considered that matter, although it could be only a part of the picture. The 3p that we propose to add to the cost of 20 cigarettes increases the forecast fall in tobacco consumption as a result of duty changes this year from about 9 per cent. to about 10½ per cent. The House will be familiar with the fact that the fall in cigarette consumption, if not steady, has been in one direction since about 1973. The long-term trend against smoking in recent years, rather than budgetary measures, has had the greatest effect on employment in the tobacco industry.
Much of the short-time working in the industry following this year's Budget resulted from the heavy forestalling in the early part of the year. I fear that on the basis of experience, and not unwisely, many retailers as well as private individuals reached the ineluctable conclusion that the changes of an increase in tobacco duty were sufficiently high for it to be wise for them to take pre-emptive action. That action and the high purchases were the primary factors in the difficulties facing the tobacco industry.
We must look at the package as a whole. It involves consideration of the other measures that fall to be debated under the other resolutions on the Order Paper. I shall do no more than make a passing reference to them. The combination of the tobacco duty, covering the bulk of the recoupment, and the changes in general betting duty, bingo duty and gaming machine licence duty, form a reasonable and balanced package designed to recoup the loss of revenue caused by the reduction in derv duty.
That reduction undoubtedly has benefited, and will continue to benefit, the business community and the country as a whole in its impact on costs. Although the net effect of the change has been slightly to change the balance of the Budget, it has not altered the central Budget judgment. Shifting the balance in favour of industry and against the consumer is a shift in the direction that the Government think it reasonable to make.
For that reason, I commend the resolution to the House as the first of four which together implement the recoupment package which my right hon. and learned Friend announced to the House last week.

Mr. Peter Shore: This is the first of the four Ways and Means resolutions before the House. They are part of this year's Budget strategy and relate to the general management, or rather mismanagement, of the British economy. The debate is inevitably overshadowed by the continued decline of the economy and the continued rise in unemployment. I suppose that it is most immediately overshadowed by the events of Toxteth and Southall, which were the subject of the Home Secretary's statement.
I do not accept for a moment that unemployment justifies the violence, rioting, looting and mob assaults that we have seen on our television screens during recent days. However, as I said in an earlier debate this year, if one in six of the 16 to 19-year-olds is unemployed and the prospect of useful training and employment has become remote and dim, the conditions are right for many forms of lesser mischief. Only last Wednesday the right hon. Member for Sidcup (Mr. Heath) advanced much the same argument when he said that
if half a million young people are hanging about the streets all day, we shall have a massive increase in juvenile crime.
He said that we are bound to get
racial tensions when young blacks have less chance of getting jobs
than young whites. These are not the only factors that will be shown to have been involved in the recent outbreaks of violence. It is common sense to recognise that in conditions of idleness and social rejection there will be an increase in crime.

Mr. Kenneth Lewis: On a point of order, Mr. Deputy Speaker. What have the remarks of the right hon. Member for Stepney and Poplar (Mr. Shore) to do with the motion before the House?

Mr. Shore: They have a great deal to do with it, as will be quickly revealed to the hon. Gentleman if he will contain himself. There has been an increase in tension, especially in the poorer areas of our cities. It is all the more serious when it is the Government's policy deliberately to cut public expenditure and, within the reduced total, to switch resources from hard-pressed inner city areas, where much stress is undoubtedly to be found, to the more prosperous and relaxed areas.
The Opposition are bitterly opposed to any measures that will increase unemployment and to any reductions in expenditure in our community. We are therefore opposed to further measures of fiscal deflation. That was our principal objection to the Budget and that is our major objection to the motions on the Order Paper.
We have been told that this is a simple and necessary proceeding, designed to recoup the £85 million concession that was made on the Floor of the House on 30 April when the Chancellor of the Exchequer announced that he had decided to reduce to 10p the 20p proposed increase in the price of derv. He made that concession not because he was persuaded by the force of our argument against imposing yet further costs on road haulage used by our sadly uncompetitive industry, and not because he was persuaded by our arguments against fiscal deflation, but because he assumed, correctly, that with the support of the Opposition there were sufficient dissidents among Conservative Members to defeat the Government if the House divided on the issue. In his surly and pedantic way the right hon. and learned Gentleman coupled his concession with the announcement that he would have no option but to ask people to pay the cost in some other way.
The right hon. and learned Gentleman asserted that he had no option because it would be unwise to allow £85 million to be reflected in an increase in the public sector borrowing requirement. He followed his announcement with a promise to consider the range of possibilities for alternative measures, including the various suggestions made during the debate on 30 April.
There are two issues for the House to debate this evening. First, and narrowly, has the Chancellor sought to


raise the £85 million in the most sensible way? Secondly, and far more importantly, is it right to recoup the sum at all? I shall concentrate most of my remarks on the second question.
In the Budget Statement the Chancellor announced one of the largest-ever increases in tobacco tax—namely, an increase of 14p per packet of 20 cigarettes, yielding about £500 million a year. In Committee we learnt that the anticipated yield takes account of an estimated fall in consumption of about 9 per cent. and an increase in the retail price index of about 0·7 per cent. Whatever views we may have of the desirability, on health grounds, of discouraging the consumption of tobacco, it is only sensible to take account of the pace at which it is reasonable to expect people, especially the elderly, to change. It is a strongly entrenched and addictive habit. Further adjustments will have to be made by manufacturers and retailers of tobacco in the face of falling sales.
The further impost of 3p per packet of 20 cigarettes following the increase of 14p only three months ago sets much too fast a pace. Smoking is a national habit. Tobacco takes a far higher slice of the income of the average and low-paid consumer than of the income of a Minister of the Crown or the director-general of the CBI.
We cannot ignore the fact that in this year's Finance Bill, let alone last year's and the Budget of 1979, substantial and specific tax concessions have been deliberately made to the wealthiest members of our society. This year we had concessions on capital transfer tax, capital gains tax and development land tax. In Committee the Chancellor found it possible to make concessions in his special tax on bank deposits at a cost of about £25 million. In this year's Budget there are obvious ways in which substantial extra sums could be raised without a further attack upon a specific industry and upon the many who consume its product.

Mr. Campbell-Savours: Is my right hon. Friend aware of the considerable anxiety that exists in constituencies such as mine, in Cumbria, with old agricultural and farming communities, when major tax concessions are given to landowners—concessions which were debated in full in Committee and supported by Conservative Members, including those from Cumbria—and to those who are not involved in farming but who are landlords, when the bill has to be picked up by industrial workers who are either working in West Cumbria or have recently lost their jobs? Is not that a measure of the Government's inability to understand that people morally object to the way in which they have conducted their fiscal arrangements?

Mr. Shore: I am grateful to my hon. Friend for spelling out much more clearly and fully the point that I was making. If the Chancellor wished to recoup £85 million he should have started by reviewing and cancelling the concessions that he gave to the landed and other interests.

Mr. Bruce-Gardyne: May I revert for one moment to the motion before the House? Is the right hon. Gentleman saying that it is the Labour Party's opinion that tobacco taxation increases are to be advised against at this time?

Mr. Shore: If the hon. Gentleman will contain himself, I shall end with a recommendation. If he had been present when the Budget resolutions were presented he

would recall that a number of votes took place. including one on the proposed increase of 14p per packet of 20 cigarettes and the resolution that went with it. I advised the House to vote against it. I advised that principally because it was part of a general package of fiscal deflation, which I believe is utterly wrong for the country at present. If the hon. Gentleman will contain himself he will find out my further recommendation later.
The point made by my hon. Friend the Member for Workington (Mr. Campbell-Savours) is right. If the Treasury Bench were bold enough to argue that, somehow or other, £85 million could not be clawed out of this year's tax concessions to landed interests and from capital gains tax and capital transfer tax, I refer it to last year' s Budget, in which about £380 million was made in tax concessions to those sections of the community which are obviously the best advantaged in the land.
I turn now to the wider question whether it is right in the circumstances of the economy in July 1981 to recoup that sum at all. Last Thursday, responding to the Chancellor of the Exchequer's announcement, I said that a sum equal to 0·1 per cent. of this year's tax yield was trivial and, further, that in the light of last year's experience, when the Government's arithmetic on the PSBR was £5 billion in error, such an attempt at fiscal fine tuning was not to be taken seriously. Moreover, the Government are operating in a growing statistical fog, as the information flows on which they normally rely are distorted and interrupted by continued industrial action by the Inland Revenue and other Government services.
Those in themselves are good reasons for leaving well alone and for letting sleeping dogs lie. However, there are stronger reasons which must be considered now. En the three months which have elapsed since the 10 March Budget it has become plain that even the dismal prospect which the Government then put before us is now being falsified by events. Our economic situation has deteriorated on almost all the main fronts which we normally consider. The Chief Secretary had the effrontery to say that nothing had happened in the past three months to invalidate the Budget judgment. I shall assist him in reconsidering that statement.
Let me take, first, unemployment, which, as the House knows, has risen by 200,000 since the March Budget was announced. This year's public expenditure While Paper, which accompanied the Budget, revealed that the Government's unemployment assumption for 1981–82 had increased from 1·8 million to 2·5 million, and would rise to 2·7 million in 1982–83 and beyond. Those figures excluded school leavers.
That is not the end of the story. Last Friday we had the report by the Government Actuary, who now tells us that
the number unemployed, excluding school leavers, averages 2·6 million in 1981–82.
That is an increase of 100,000 since the March public expenditure White Paper. In addition, the number of unemployed school leavers and adult students or persons whose employment is temporarily stopped will average about 240,000.
I am glad to see that in this, at any rate, there is co-ordination between Government Departments. The Government Actuary says that:
in accordance with the normal practice, working assumptions have been given to me by the Government in regard to these factors.


In short, the 2,600,000 is an assumption which the Treasury has instructed him to use.
The second change on which I should like to comment is the revised anticipation of economic growth. In the Red Book which accompanied the Budget Statement the United Kingdom's gross domestic product was expected to fall by a further 2 per cent. in 1981. At the same time, the Red Book forecast that in the first half of 1982 there would be a rise of 1 per cent. over the first half of 1981. Since then, the Treasury has received the June short-term forecast.
I suppose that the Chancellor of the Exchequer has read it. If so, he or the Chief Secretary will be able to confirm or deny the report which appeared in The Daily Telegraph last Saturday. It seemed fairly convincing to me. We learnt that in the Treasury's view the outlook is for roughly nil growth in 1982, or even for some further contraction of output. That is certainly not contradicted either by the latest figures of the index of industrial production or by industry's investment intentions, which show, among other things, an alarming fall of between 11 per cent. and 14 per cent. in investment in manufacturing industry.
Another factor which deserves mention is the reports submitted by the Brussels Commission to successive meetings of the Euro Council. It submitted a report in March at the Maastricht summit, and only a few days ago it submitted one to the summit which took place in Luxembourg. Both reports show that in the EEC as a whole there will be no growth—indeed, minus 0·6 per cent—in 1981. It is significant that the Commission's figure for growth in the United Kingdom has altered between those two forecasts. I can only assume that the Brussels Commission gets its material from the Treasury. It is not a dramatic change. When we talk about growth in gross domestic product in Britain we are talking not about positive growth but about negative growth. The change is from minus 2 per cent. in 1981—the figure which accompanied the March summit—to minus 2·2 per cent. three months later, on the eve of the Luxembourg summit a few days ago.
My third point concerns inflation. In the Red Book the Government forecast inflation falling to 10 per cent. by the fourth quarter of this year and to 8 per cent. by the second quarter of 1982. That was based on the assumption that the exchange rate would remain constant. However, we have now had depreciation of about 8 per cent. in sterling. That by itself could add between about 2 per cent. and 3 per cent. to both those inflation rates. Therefore, on the basis of their assumptions, the Government should now be forecasting double-figure inflation for next year.
The House will also have noted that inflationary expectations, as given in the Financial Times this morning, show a further rise. In particular, firms are expecting to expand their profit margins. That was almost certainly not allowed for in the Red Book forecast and is a further factor tending to increase in the forecast of higher inflation.
Before I came into the Chamber for the debate I collected the press notice put out by the Department of Industry on wholesale price indices for June. I shall not go over it in detail, but I draw attention to the input prices in the price index for materials and fuel purchased by manufacturing industry, which increased by 1½ per cent.

between May and June. The increase in that index, measured over 12 months, rose from 12¾ per cent. in May to 14 per cent. in June.
There is no doubt that the Budget forecasts of inflation will be falsified. That development has significance in any event, but it has a special significance for the Government. In their view a higher inflation rate is associated with a rise in sterling M3, and thus the 6 per cent. to 10 per cent. target M3 is almost certain to be exceeded.
Those who remember the debates on the Budget and on Second Reading of the Finance Bill will recall the extraordinary series of statements made by the Chancellor of the Exchequer, the Chief Secretary and the Financial Secretary on the question whether this year's Budget was deflationary. It was my contention that, having reduced the PSBR from its outturn of £14 billion to a new total of £10½ billion in 1981–82, and having increased the burden of taxation by no less than £4,000 million, the inescapable and commonsense conclusion was that the effects would be deflationary. Both the Chancellor and the Chief Secretary claimed that it was not deflationary, because the 1981–82 PSBR figure was higher than they had intended it to be a year before, but I did not find that terribly convincing.
It was left to the ineffable Financial Secretary to claim that the Budget was not deflationary at all, since there was room for growth in the target range for the money supply. If the money supply and inflation are now moving above the 6 per cent. to 10 per cent. range, as I believe they are, even on the Financial Secretary's calculations, there is clearly no room for growth in the economy. Moreover, if the Treasury team remains true to its own monetary doctrines we can shortly expect not lower but higher interest rates to keep the money supply on target.
Let us look at the implications of those three changes since the Budget was introduced for the unemployment calculation and level, the outlook for GNP and the rate of inflation. Incidentally, I cannot resist recalling that it was as long ago as 14 January 1981 that the Financial Secretary gave this judgment in Zurich:
we have now more or less reached the bottom, and brighter times are clearly in sight.
We are all looking for those brighter times and are most anxious to reach the bottom. However, I am afraid that it appears to be a rolling target for brighter times, and certainly they have been postponed.
An increase in unemployment of 100,000 had already been admitted, and taking account of both the benefits paid and the tax revenues forgone, it will add £500 million to this year's PSBR. That is a simple and, I believe, irrefutable calculation. In addition, the lower prospect for growth will also entail further losses for the Revenue. I hesitate to put a figure on it.
That is the background against which we must now judge the Chancellor's decision to demand £85 million to "restore" the integrity of his Budget judgment of 10 March. Whom does he think he is fooling? Why on earth is he doing it? Is he so obsessed with book-keeping transactions that he is unaware of the larger movements that will affect the whole sum? Sometimes when I look at the Chancellor I could be persuaded that that was, in fact, the case.
However, I am also aware that we are in a period when the Government have embarked on their review of public expenditure for next year. That process, which began with the special Cabinet meeting a fortnight ago, will no doubt


come to its conclusion later in the autumn. It may be that the Chancellor is anxious to convince his Cabinet colleagues that if they do not subscribe to further cuts in public expenditure he will, as he did this year, inflict still further increases in taxation in the 1982 Budget.
What should be clear to anyone who has eyes to see is that the Government are heading for still further problems and a still deeper crisis as the year wears on. We are witnessing a repeat of last year's events. The economy is continuing in deep recession. Further public expenditure cuts will be sought in what must now be the certain knowledge that, when achieved, they will only add to the recession and, at the same time, be largely negated by the increase in other forms of public expenditure that an ever-deepening recession makes inevitable. Unless North Sea oil revenues come to the rescue, it is already beginning to look as though the indexing of tax allowances in 1982 is at risk.
We are in a downward spiral. So long as the Government continue along their crazy course of believing that the economy can be successfully managed by an obsessive devotion to money supply targets and by adherence to an inadequate PSBR there is no escape for either the Government or the country.
The sums that we are debating tonight in the Ways and Means resolution are trivial against the background of the country's economic needs, but they are highly symbolic. They are a symbol of the Government's continued commitment to irrational and damaging dogmas.
To come to the question put to me by the now absent hon. Member for Knutsford (Mr. Bruce-Gardyne), in voting against the increased tobacco duty—which I urge on my hon. Friends—we shall also be voting against the whole thrust of the Government's policy.

Mr. Teddy Taylor: The Shadow Chancellor—the right hon. Member for Stepney and Poplar (Mr. Shore)—has extended the scope of the debate beyond what many of us expected. Let me deal briefly with one point in his general argument. The reason why I and the majority of my hon. Friends will support the motion is not that we believe that an increase in tax on tobacco or on anything else is in itself necessarily a good thing, but that it confirms the principle, which, if it had been applied by previous Labour or Conservative Governments, would have avoided the appalling mess that we are in—the simple principle that things should be paid for.
The Shadow Chancellor must be well aware that a major problem in our economy is that successive Governments, particularly Labour Governments, have provided services for the community that it desired, without charging the necessary tax for them. The result is a massive rise in the national debt, to the extent that it now stands at about £100 billion, on which the interest this year will be not far short of £10 billion. Put in realistic terms, it means that the average family in Southend, and, indeed, in the Shadow Chancellor's constituency and elsewhere—

Mr. George Foulkes: And in Basildon.

Mr. Taylor: —and in Basildon and Glasgow, will have to pay about £18 a week in direct or indirect taxation simply to pay interest on the accumulated debt.

Mr. Campbell-Savours: How can the hon. Gentleman go back to Southend and justify the increases in tobacco taxation, in view of the concessions given to a select few in the capital transfer tax provisions? I worked in the Southend by-election when the hon. Gentleman was elected. I do not remember his suggesting to the electors at any time in the campaign that he would support a Government who raised the tax on working people to pay for major concessions in the capital transfer tax provisions. How can he justify that?

Mr. Taylor: The hon. Gentleman is aware that the tax is a balancing charge for a reduction in derv, which will help working people substantially. It will affect the average cost of goods, and particularly public transport.
My constituents and those of the hon. Gentleman would not be suffering as they are if, for example, the Labour Government, who inherited a national debt of £42 billion, had not almost doubled it, to £87 billion. The Shadow Chancellor will be well aware that, had we not had that outrageous rise in the national debt, we should not be in this serious situation.

Mr. Shore: Although there have been unwelcome increases in the national debt, as a proportion of the GNP it has not risen in recent years. In fact, it has fallen.

Mr. Taylor: The national debt increased more under the previous Government than it did under all other Governments in the history of the United Kingdom, which shows the seriousness of the situation. Before he embarked on his Budget the Chancellor of the Exchequer had to find the equivalent of £18 per week per family in tax simply to pay interest on the accumulated debt. We may argue that it was the fault of one Government or another, but to carry on in this way is to make the situation worse.

Mr. Foulkes: If things were as bad at the last general election as the hon. Gentleman alleges, how did he manage to lose his seat for Glasgow, Cathcart?

Mr. Taylor: The hon. Gentleman is well aware why, after 15 valiant years, that happened. Irrespective of what happened in Cathcart or South Ayrshire, he should be aware that if we did not have a horrendous national debt the problems of any Chancellor would be much easier to cope with. I hope that in this case the Government will adopt as a general principal—I hope that the Minister will confirm this—the idea that concessions should be paid for in taxation. If they are not, the rake's progress will continue.
I put one other general point to the Shadow Chancellor. He was desperately pessimistic, and there is plenty of evidence to support what he said. There is, however, one missing link—which he did not mention, but which I hope he will consider—which may make the position less gloomy than it might otherwise appear. He will know that the Government have committed themselves to major EEC reforms and are hoping to achieve major changes under the British Presidency. I think that he will agree that if we achieve those changes they may provide a major boost to employment and prosperity in the United Kingdom.
The Government are going for a reduction in contributions. The right hon. Gentleman will know that since we joined the EEC we have had to contribute £3 billion net, a massive sum, which has drained prosperity and jobs in this country. The Government are also seeking to renegotiate the CAP, the burden of which is intolerable


and adds enormously to British costs, particularly industrial costs. I think that the right hon. Gentleman would agree that although the outlook is gloomy, if the Government succeed in reducing some of the horrific burdens involved in EEC membership the outlook may not be so gloomy and there may be a major improvement in job prospects for this country.
I make two brief points on the proposal put forward by the Chief Secretary today. First, I accept the principle that we should pay in tax for the concession on derv. I believe that any other proposal would be irresponsible, irrespective of the amount.

Mr. Clive Soley: I understand the hon. Gentleman's point, but will he respond to the point put to him earlier that the taxes should be paid by those with high incomes, particularly in capital transfer tax and the like? Why do they have to be paid by people on lower incomes?

Mr. Taylor: I can only say that I am a smoker, and I like to think of myself as not having an unduly low income. Tobacco is smoked by people right across the board. Although there has been a reduction in smoking in the so-called A/B group, the hon. Gentleman must accept that we are talking about a transfer from derv to tobacco. Certainly the reduction on derv will considerably benefit working people, particularly in relation to public transport and other means of conveying themselves to work or indeed anywhere else.

Mr. Foulkes: When I used that argument about public transport in discussing the Budget proposals I was attacked by a Conservative opponent in Scotland, who said that the increase did not apply to public transport. Can the hon. Gentleman or the Minister tell me which of them is right on this matter?

Mr. Taylor: The hon. Gentleman will be aware that derv is used for all forms of conveyance. I believe that it will be a major help to the whole community, particularly in the transportation of goods, or, indeed, people. A reduction in the cost of transportation will benefit working people. I suggest that if the hon. Gentleman were offered a straight choice of helping his constituents through a 10p concession on derv or a 3p concession on 20 cigarettes he would accept that the net benefit to his constituents would lie in the present proposal.

Mr. Foulkes: rose—

Mr. Taylor: This is a long debate. The hon. Gentleman has interrupted me twice. He has interrupted me a great deal on previous occasions and usually ends up pushing a totally inaccurate point. I think that we should get on with the debate on this minor issue.
I hope that the Chief Secretary will take note that while I accept the general principle that we should pay for the concession, I wonder whether there is a danger in this measure of adding a further burden that might kill the goose that has laid so many golden eggs for this and previous Governments. It may not be generally realised that the Government obtain substantially more revenue from tobacco than from North Sea oil. The figures in the Red Book were £3·2 billion from tobacco, and £2·2 billion from North Sea oil. To that extent, it is certainly an important industry.
Has the Chief Secretary also considered the fact that the tobacco industry has a record almost unique in British industry for coping with import penetration? I wonder how many other industries supply about 95 per cent. of home demand and create enormous wealth for the country through exports. By comparison with almost any other industry, the tobacco industry achieves more in resisting imports and promoting exports.
I wonder, too, whether any other industry provides good employment in so many areas where there is massive unemployment. In areas such as Glasgow and Belfast, and in other areas of high unemployment, the tobacco industry not only provides good employment but appears to have as good a labour relations record as any other industry in similar circumstances.
I wonder also whether any other industry makes such a large contribution to the survival and prosperity of the small shops which are so vital throughout our community. I wonder whether many other industries make such substantial charitable contributions.
I have no interest, direct or indirect, in the tobacco industry, but I believe that there is a real danger that if we increase the tobacco tax by too much too fast the Government will find themselves without this enormous source of revenue.
Bearing in mind that the increase in taxation is taking place at the same time as a vigorous Government campaign against smoking, has the Chief Secretary given any thought to the kind of tax that he would bring forward to raise that vast amount of money if receipts from tobacco tax were substantially reduced?

Mr. Foulkes: On a point of order, Mr. Deputy Speaker. Is it in order for an hon. Member to mislead the House, in spite of the matter having been drawn to the attention? For public transport, the consequential reduction in stage bus fuel grant means that £10 million is, as it were, returned to the bus operators—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. The hon. Member for Southend, East (Mr. Taylor) is responsible for his own speech. No doubt the hon. Member for South Ayshire (Mr. Foulkes) will try to catch my eye to put him right.

Mr. Taylor: The hon. Member for South Ayrshire (Mr. Foulkes) has made his parliamentary career and his considerable public career in the basis of making erroneous statements with great regularity. If I have made a mistake, I shall withdraw it forthwith. On the other hand, I hope that he will accept that if the tax on derv is reduced it will reduce the cost of conveying goods and materials and will generally help the economy and help industry, and thereby help employment. I believe that on balance the present proposal is a better deal.
I make this simple point to the Minister. Bearing in mind the amount of money that the Government receive from this one industry, and remembering its unique contribution to the British economy and to exports, will he carefully watch the consumption of tobacco, to ensure that we are not suddenly faced with a collapse of that major source of revenue? Will he also consider it appropriate to tell his colleagues that because of its contribution the industry should be treated with more understanding? I am thinking in particular of advertising, where the industry's attempts to push low-tar cigarettes, which are generally regarded as being less harmful, have been largely


undermined by the activities of the Department of Health and Social Security, and to a lesser degree by the Government's own Budget proposal to do away with the extra tax on high-tar cigarettes.
I support the Government's move, because I believe that it is right that concessions should be paid for. I hope that in so doing, however, the Government will bear in mind the unique contribution made by this successful industry. I hope that they will watch carefully for the possibility of that revenue collapsing and having to be replaced from other sources, and I hope that because of that contribution the Minister will advise his colleagues to treat the industry with a little more understanding.

Mr. Michael Martin: I represent an area in which unemployment is worsening day by day, as it is throughout the country. Most of my unemployed constituents would dearly love to be employed by the tobacco industry, which at present employs 3,000 people in my constituency. Unfortunately, the industry has experienced short-time working because of the 14p duty increase. I understand that 13,500 people have been put on short-time working.
I am perturbed about the anti-smoking lobby, which seems to have the ear of the Government at present. I only wish that those who are involved in the anti-smoking campaign would bear in mind that although smoking could be harmful to one's health, unemployment is harmful to people's health—not only to the unemployed but to their families.
The tobacco industry cannot be accused of being a bad employer—far from it; it is a first-class employer. The wages for manual workers are good and the industry introduced equal pay long before it was even talked about in other industries. Working conditions are second to none, and industrial relations are first class. I cannot remember there ever having been a strike in the Glasgow factory. Whenever I have approached the management or the work force they have always been only too pleased to receive me as an elected Member of Parliament. The facilities enjoyed in the industry are far superior to those in any other industry. It provides health care facilities in the factory, and the local community is very grateful for the help that it has received from time to time.
On several occasions I have heard the Prime Minister condemn the British worker because of restrictive practices. If she would care to come to the Glasgow factory she would see that there are no restrictive practices there. In fact, the members of the work force realise that by accepting modern technology they are putting themselves out of a job. Three years ago the machines in the factory turned out about 2,000 cigarettes a minute. A machine has now been introduced which turns out 6,000 cigarettes a minute.
As the Minister said, tobacco consumption is falling—that means that the work force will be in danger of unemployment—and the increase in tax will not help. I urge the Minister to reconsider the increase, because it will affect people—decent, hard-working people, who over the years have built up an excellent record in the industry.
Over the years Imperial Tobacco Ltd. has diversified. It is widely known that it has put a great deal of finance into operations such as breweries and even potato crisp factories, and rightly so. If the industry is declining, it

must look to other areas to ensure that it does not go completely out of business. I was perturbed that at this time last year "Imps" invested in the United States and bought a food chain for which, I understand, it paid well over the asking price. Thus, the wealth created by tobacco is going out of the country.
I have constantly put to Imperial Tobacco Ltd. the argument that if it is to diversify it should invest in businesses adjoining the existing factories, so that if the workers are to be put out of work in the tobacco industry they will have the opportunity of working in the new industries in which "Imps" invests. It will be all the harder for me and for other hon. Members with tobacco industries in their constituencies if the Government add more and more taxation to tobacco products. I urge the Minister to consider the facts.
I come now to the question of the anti-smoking lobby. I do not wish to get involved in the health arguments; it would be nonsense to say that tobacco is not harmful to one's health. As the hon. Member for Southend, East (Mr. Taylor) said, the tobacco industry, in its advertising, is trying to direct the consumer towards smoking low-tar cigarettes. It annoys me when people tell us that they wish to prevent smoking because it is harmful to health and that they even want to stop people sitting beside someone who is smoking. I only wish that those people would get involved in the cause of many workers who are having to inhale obnoxious fumes because of the type of processes that are involved in welding, and so on.

Mr. Foulkes: Does my hon. Friend agree that this House has enacted much legislation to protect people who are working in environments such as those that he described? Does he not also agree that there is evidence that the health of people sitting next to smokers is affected? Is it not right that they should be protected, and is it not reasonable to argue that case?

Mr. Martin: Of course that is reasonable, but I am saying that they should direct their energies into helping those people who work with harmful substances in other industries. They would thereby help people who, over the years, have been crying in the wilderness.

Mr. Soley: I understand the argument, but the point is that we should try to control any harmful substance, especially if it affects the health of people who do not indulge in it. The answer is to retrain and to assist companies to invest in other areas rather than to continue manufacturing a product that is known to be harmful. That argument applies to other drugs, such as heroin, which we do not permit at present.

Mr. Martin: I would not compare heroin with low-tar cigarettes.
Glasgow has a historic connection with the tobacco industry. Many of our historic buildings were built from the wealth that the industry created. Not long ago the people who ran the tobacco industry also ran the city of Glasgow. It is sad that the heavy engineering and shipbuilding industries have declined. We are worried about some of the colleges of engineering where we train our young people. Many young people ask me "What is the point in staying? Is there any future for us?" It is difficult to give them a positive answer.
If the tobacco industry in Glasgow declines it will impose more and more hardship on our citizens. I ask the Minister to reconsider his proposal.

Mr. K. Harvey Proctor: The hon. Member for Glasgow, Springburn (Mr. Martin) is knowledgeable about the tobacco industry. He put his case extremely well, unlike his right hon. Friend the Member for Stepney and Poplar (Mr. Shore), whose speech was a sandwich with a thin filling. There was a slice of stale bread on either side of a filling that consisted of tobacco and the tobacco industry. The first slice consisted of his remarks about the recent distrubances in Toxteth, Liverpool. The right hon. Gentleman almost said that the Government's economic policy should be dictated by mob violence on the streets of that city and other cities, if violence breaks out. That is unacceptable to the House. There is no excuse for the type of rioting that took place in Liverpool and Southall.
The second stale crust in the right hon. Gentleman's sandwich was the link between inflation and unemployment. There is a link, but not necessarily as the right hon. Gentleman perceived it. If inflation is not controlled, I foresee even higher levels of unemployment. The reason why we have such high levels today are many. One is that successive Governments, Labour and Conservative, have allowed too high a level of inflation, with all the difficulties that that has meant for the competitiveness of industry, particularly manufacturing industry.
I come to the Government's attitude to the recoupment by my right hon. and learned Friend the Chancellor of the Exchequer of the diesel fuel oil concession forced upon him by the House. There is no doubt that the Government are right to introduce measures to cover the concession, because I believe that inflation is uniquely caused by politicians; nobody else can cause it. It has been caused by politicians of both parties over the past two decades spending more money than they took in taxation, covering the difference by borrowing or printing money, or by a combination of the two.
The present Government have rightly shied away from that inflationary trend, unlike the Opposition. At the weekend the Leader of the Opposition made it clear that they would try to spend their way out of our economic difficulties. Where the money would come from was a matter of no consequence. There was no commitment to increased taxation. Labour would borrow the money. That would have an increasing effect on interest rates, which the Opposition want to be as low as possible. It is nonsensical to try to get out of the country's difficulties by pursuing policies that have failed under successive Governments for the past two decades.
If the Government had not come forward with a proposal to recoup this money there would have been an added twist—however small or large might be considered—to the inflationary spiral, and rightly the Government shied away from it.

Mr. Campbell-Savours: The hon. Gentleman referred to a curious twist. Is not there another curious twist, which is that we all know that very effectively he puts the case on behalf of the British Paper and Board Industry Federation? In all our debates on the paper and board industry, he is noted for his interventions. However, he will notice that in the way that the decision has been taken by the Government, the original inclusion of a 20p increase was objected to by the federation, the case for which he puts so effectively. It said that it would damage its interests in the transport of paper and board from the regional plants to the major conurbations. I heard the hon.

Gentleman object to that on the basis that it was an unfair penalty for the industry. But has not he also noticed that the effect of this proposed tax will be to reduce the consumption of cigarettes, and that one of the greatest areas of operation for the paper and board industry is the prodution of packets in which cigarettes are marketed. Has not the hon. Gentleman received already—

Mr. Deputy Speaker: Order. Interventions should be brief.

Mr. Campbell-Savours: I was just completing my intervention.

Mr. Proctor: I think that I understand the gist of the hon. Gentleman's remarks. However, he has commented on the opening paragraphs of my speech rather than waiting for the sum total of it. It is my intention to speak at length about the tobacco industry. The remarks that I was making about inflation were by way of a preliminary to my main contribution. I may carry the hon. Gentleman a little further in a different part of my speech if I cannot do so in this.

Mr. Soley: May I repeat the question that I put to the hon. Member for Southend, East (Mr. Taylor)? Why could not the money have been raised from capital transfer tax or one of the other taxes?

Mr. Proctor: That is a question for my right hon. and learned Friend, and no doubt he will answer it at the conclusion of the debate.

Mr. Soley: The hon. Gentleman has the vote.

Mr. Proctor: The hon. Gentleman heckles and says that I have the vote. I shall comment on that as well. The interventions of both hon. Gentlemen were a little premature.
I am arguing that in their effort to control inflation the Government are right to recoup the loss to the Exchequer from the diesel fuel concession. Therefore, I now declare a constituency interest, in that I have in my constituency a cigarette-producing factory employing some 1,200 people. Because of the company's success in export markets, unlike other factories in different parts of the United Kingdom, it did not anticipate any loss of jobs as a result of the increased duty imposed by my right hon. and learned Friend in this year's Budget. Had sales in the United Kingdom not fallen since the Budget it could have been in a position to increase its labour force.
In May of this year I received a letter and representations from the general secretary of the Tobacco Workers Union, Mr. C. D. Grieve. I quote one paragraph:
The massive tax increase which you imposed in the Budget in March has had a most serious effect upon the 30,000 people directly employed in the industry. It has led to widespread short-time working—a situation which still persists—and in cigar factories in particular this looks set to last for a long time to come. There has as well, of course, been an impact upon the hundreds of thousands indirectly associated with the tobacco industry: paper and board makers
—the hon. Member for Workington (Mr. Campbell-Savours) was quite right—
engineering companies, wholesalers, small shopkeepers and so on. Any further duty increase, so shortly after the last one, could have even more serious implications.
Unfortunately, those representations were not heeded.
Taxation of cigarettes, as my right hon. and learned Friend mentioned, is complex. The tax is made up of three components—a specific tax per 1,000 cigarettes, an ad valorem tax of 21 per cent. of the recommended retail


price including VAT and VAT payable on the tax-inclusive price. The total tax on cigarettes accounts for almost 75 per cent. of the retail price—that is it is equivalent to a VAT rate of 300 per cent. The total tax increase in the March Budget was about 30 per cent., increasing the price of 20 cigarettes by 19 to 20 per cent.
As a result of the Budget decision, consumption of cigarettes has fallen and it is estimated that consumption has levelled off at 10 to 12 per cent. below the level following the increase in the 1980 Budget. It will be some months before the true effect is known.
The additional increase in tax proposed in the motion will put up the total taxes on cigarettes by over 35 per cent. since April 1980. After allowing for inflation at 12 per cent., that is a 21 per cent. increase in the real level of tax. Notwithstanding what my right hon. and learned Friend said, that is unprecedented. He was right to point to the example in 1975 when there was a similar percentage increase in cigarette taxes. After allowing for inflation at 25 per cent., the real increase since 1975 has been about 8 per cent.
Because of the size of the increase, the fact that it is a second increase within four months and the present decline in disposable income, reinforced, as the hon. Member for Springburn said, by the anti-smoking campaign, it is possible that the increase in tax will have a disproportionate effect on sales, as my hon. Friend the Member for Southend, East (Mr. Taylor) mentioned.
The industry's estimate is of a 10 to 12 per cent. drop in sales as a result of the increase in the March Budget and that compares with the Treasury's estimate of 8 to 9 per cent. If correct, that will result in a significant Budget deficit on tobacco revenue. The Treasury estimate is that the latest increase in tobacco taxes will yield £60 million. I think that that will be called into question in the light of experience and the fall in sales. I do not think that the Chancellor will receive that amount of money in the remainder of the financial year.
The large and unprecedented increase in tobacco taxes, with the inevitable drop in consumption of tobacco products, will have serious consequences for the United Kingdom tobacco industry, affecting employment—a high proportion of which is likely to be in areas already with high unemployment. The consequential increase in manufacturing costs will affect the competitiveness of the industry in export markets—many of the cigarettes manufactured in my constituency are exported—and that will further affect employment in the industry, its suppliers and the retail trade.
My right hon. and learned Friend said that the test was whether these increases were reasonable and fair. I believe that they are unreasonable and unfair. For those reasons I regret that I cannot support my right hon. and hon. Friends in the Lobby tonight. However, having heard the contribution of the right hon. Member for Stepney and Poplar, and as it is clear that a vote against the resolution is a vote for further inflation, I intend to abstain.

Mr. Richard Wainwright: These four tax resolutions are a wretched monument to a blindly obstinate Chancellor sitting in a deeply divided and demoralised Cabinet. That is not to say that alterations to the Budget are not urgently necessary. There are many circumstances in which Liberals would have been the first

to welcome a change of strategy four months after the Chancellor's forecasts in his Budget Statement, which have proved to be substantially wrong.
Since the Budget forecast was given, unemployment has increased much more rapidly than the Chancellor claimed would happen. The Treasury's confident assertions in the early spring that the recession was bottoming out have proved wrong. There is now great uncertainty about the future of interest rates and the growth of inflation.
There is certainly an overwhelming case for a serious review of the Budget measures, in order to reflate demand, to reduce the burden of taxation and to take urgent action to preserve the physical assets of Britain's infrastructure. Therefore, the Chancellor would have been welcomed in his wisdom had he come to the House—as any Officer of State is entitled to do—and said that his judgments had been faulty and that changes were needed.
Instead, we have this petty measure to make a trivial alteration, for reasons which I find quite baffling, unless it is that those who understand the arcane mysteries of organising a whipped party feel that there must be a measure of petty nursery or kindergarten discipline to rap the knuckles of Conservative Back Benchers who in April were naughty enough to force a modest reduction in derv duty. However, that is no reason for a Chancellor, who should be occupied with major matters, coming forward with this nanny-like, governess-like measure that contributes nothing to Britain's financial policy.
One measure that would have been immensely welcome had it figured in the resolutions would have been the phasing out of the national insurance surcharge, so that we would have lost a deliberate tax on jobs and exports. But there is nothing of that. We simply have this miserable measure, and without hesitation I shall advise my right hon. and hon. Friends to vote against each of the resolutions.

Mr. George Foulkes: These days I am not sure whether the advice of the hon. Member for Cone Valley (Mr. Wainwright) to his right hon. and hon. Friends includes those who are in alliance with them. But in these heady days of the by-election at Workington—[Hon. Members: "Warrington".] I apologise to my hon. Friend the Member for Workington (Mr. Campbell-Savours). I know that he has not been feeling too well recently, but we are glad that he is with us and that is no question of a by-election there. That terrible mistake spoils my peroration. As the by-election in the Northern town of Warrington approaches we do not see much of the Social Democrats here. It therefore makes little difference whether the hon. Member for Colne Valley, as well as his Liberal colleagues, is advising them to vote one way or the other.
Now that the Chancellor and his team have seen fit to introduce this mini- or micro-Budget—it may be that we shall get another one in a few weeks—we have a good opportunity to say a word or two about the measures of recoupment that the Chancellor is proposing. There have been great complaints recently about the introduction of gross and unpleasant words into the English language, and "recoupment" is one of the most unpleasent and gross words that I have ever heard. It is unpleasent and gross in itself, but even worse for what it can mean in practice.
As my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) said the other day—and, I think, repeated today—the resolution is completely unnecessary in relation to the amounts involved in the Budget strategy. The amount is far smaller than the margin of error in the Budget as a whole. On that ground alone it is ridiculous. The motivation behind the proposal is spiteful. It is a sort of schoolboy reaction from the Government, because they were defeated on their proposal concerning the derv tax.
Now that the hon. Member for Southend, East (Mr. Taylor) has returned to the Chamber—I am very pleased to see him—I should like to tell him that I agree with him about the need to reduce the tax on derv, or at least not to increase it, as had been proposed. He mentioned the extra cost on the carriage of goods. That cost will still be incurred, although it will not be quite as large as orginally proposed, but if the hon. Gentleman wishes to take his argument to a logical conclusion he should not be in favour of any increases in the tax on derv.
I pointed out to the hon. Gentleman a slight inaccuracy in what he was saying. I have much less parliamentary experience than he has—he having represented constituencies in different parts of the country—but it was pointed out to me much earlier, during discussions on the Budget resolutions, that there was a rebate of tax on public transport. However, I apologise to the hon. Gentleman if I caught him unawares when I interrupted him during his speech to point out the inaccuracy. You were not here at the time, Mr. Deputy Speaker, but I was much taken aback by the hon. Gentleman's attack on me in reply to my interruption, when he said that I was building a reputation for inaccuracies. If I had been as spiteful as the Government are I should have asked the hon. Gentleman to withdraw his remark, or at least to justify it, although I know that he cannot justify it.
The Scottish newspapers are very sorry that the dial-a-quote Member has left Cathcart and is now regaling the media in Southend with his regular quotations, such as "Bring in the watercan". The hon. Gentleman has been replaced in Scotland, not in Cathcart but in Aberdeenshire. I am sorry that the hon. Member for Aberdeenshire, East (Mr. McQuarrie) is not with us today for the debate, because he has made a considerable reputation in Scotland and elsewhere as the leader of the rebellion on the derv tax. He is known in the North-East of Scotland as the "Buchan Bull". We have not heard his bellow today. It would have been useful to have his contribution.

Mr. Teddy Taylor: Will the hon. Gentleman desist from these unfair, violent and personal attacks on my hon. Friend the Member for Aberdeenshire, East (Mr. McQuarrie), who has achieved far more for Scotland in the short time that he has been an hon. Member than all the Scottish Labour Members put together? It must surely be accepted that the Government's move on derv and saving the people of Gibraltar from being destined to have second-class citizenship are a direct result of initiatives taken by my hon. Friend. The hon. Member for South Ayrshire (Mr. Foulkes), with his limited experience, should get on with trying to do a job for Scotland, instead of spending all his time making nasty, sneering attacks, which were the whole basis for his wretched victory in his constituency.

Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. We have had the diversion and the reply to it. I think that we should get back to the debate.

Mr. Foulkes: You are quite right, Mr. Deputy Speaker. My remark did not warrant such an intemperate, insensitive and ignorant remark by the hon. Member for Southend, East. I am happy to congratulate the hon. Member for Aberdeenshire, East on everything that he has done, but one thing that we in the Labour Party have done that he will never achieve is to get rid of the hon. Member for Southend, East. We are proud of that achievement.
I am sorry that my hon. Friend the Member for Glasgow, Springburn (Mr. Martin) is not present. I understand the points that he made about the proposals to increase the tax on tobacco and the problems within his constituency. I understand the worries of hon. Members about employment prospects in their constituencies when jobs are affected. I am not critical of their anxiety that constituency interests should be represented. Quite the reverse. I am, however, one of the people to whom my hon. Friend was referring. I am one of the anti-smokers. I make no bones about the matter. I find it offensive that people smoke in public and affect the health of other people. It is accepted that medical evidence shows that people occupying a room with smokers, sitting in the same railway carriage as smokers, or, indeed, finding themselves in any place where there are smokers and who do not smoke themselves, have their health affected by people who are smoking.
I was concerned that my hon. Friend was implying that those who want to reduce smoking are not also anxious about safety in industry. I refute that suggestion. We are equally anxious about health and safety at work, in all its aspects. One cannot represent a mining constituency, as I do, and not know the problems faced by people in that industry. Over the years, Governments representing the party of my complexion have introduced Act after Act to protect people in the mining industry and other industries.

Mr. Teddy Taylor: Jim Sillars fought hard for the miners.

Mr. Foulkes: The hon. Gentleman has no effect on me. He has a great effect on the conduct of the debate. No doubt the House will treat the hon. Gentleman's sedentary remarks with the contempt that they deserve. I have mentioned the fact that Labour Governments have introduced legislation to protect people in industry. We are equally concerned about the effect of continual smoking not only on smokers themselves but on those who are in the vicinity. Our anxiety for the people who smoke must lead us to the view that some action is necessary to try to reduce the amount of smoking. I have grave reservations, however, about whether that should be done through taxation. There are many other ways to achieve that.
I support what Mr. David Simpson, the director of ASH, said when commenting on the concordat, or agreement, signed by the Government and the tobacco industry. He said:
It is like the Home Guard trying to fight off a nuclear attack.
That describes much of what the Government do. Mr. Simpson suggested a complete ban on advertising except at the point of sale. He suggested a complete ban on sponsorship and the devising of health warnings that work. I support such suggestions. I hope that the Health


Ministers will take firm action, so that taxation is not used as a social tool. The Government say that they are not trying to use it as a social tool.
The Treasury has never used that argument. It argues that the tax will be a revenue raiser. We would not be here today if that were not so. The Treasury says that it is losing £85 million because of the reduction in the tax on derv and that it must find some other way to raise the revenue. However, as my hon. Friend the Member for Workington said, there is increasing evidence that the fall-off in smoking—which I welcome from a health point of view—means that the Treasury will not receive the money that it expects.
It is not just a matter of Buckmaster and Moore. The Minister was particularly inept in answering questions on that matter when it was raised by my hon. Friend the Member for Workington. He dismissed it as involving just one City stockbroker. However, when one City stockbroker or City analyst produces even the most minuscule forecast hinting that the Government's strategy may be successful it is quoted as gospel by everybody, including the Prime Minister. The Minister cannot dismiss one careful analysis about the way in which the revenue is falling off when, on numerous occasions, he and his colleagues quote similar sources to support a belief—and it is just a belief—that the economy is bottoming out and that an upturn is on the way. Buckmaster and Moore predicts that the rise in tax announced in the Budget will lead to a substantial falling-off—more than the 15 per cent. forecast by the Treasury. The new tax must lead to a further falling-off. It cannot produce the revenue expected of it.
It could be said that people who argue as I do should suggest other ways of bringing in revenue. I shall come to that. I question the need for such fiscal fine tuning. In the Finance Bill Committee the Financial Secretary to the Treasury announced a change in the windfall tax for banks. That was welcomed by both sides of the House. I do not criticise it.

Mr. Michael English: I hope that my hon. Friend will withdraw his remark that it was generally welcomed by both sides of the House. Many hon. Members on both sides have distinct reservations about any ad hoc taxes, including that one.

Mr. Foulkes: I will certainly withdraw any implication that the windfall tax was generally welcomed. I welcomed the windfall tax, but I know that it was not welcomed by many Conservative Members. What I was talking about was the change in the windfall tax, which was particularly helpful to small banks. In the Finance Bill Committee the reduction in that tax was generally welcomed by both sides—that is what I was trying to get over.
The hon. Member for Galloway (Mr. Lang) spoke before the announcement on behalf of the Trustee Savings Bank. He is a director of the South of Scotland Trustee Savings Bank, and he argued for a reduction in the tax. My hon. Friend the Member for Huddersfield, East (Mr. Sheerman) and other hon. Friends argued equally strongly on behalf of the Co-operative Bank. So when we got the £25 million concession it was generally welcomed. I hope that my hon. Friend the Member for Nottingham, West (Mr. English) will accept that adjustment and clarification of what I said.
The £25 million is more than one-quarter of the amount with which we are dealing—the £85 million for which we

had the mini-Budget, this series of Ways and Means resolutions and an expensive debate. Will there be another mini-Budget, a mini-mini-Budget, a mini-micro-Budget, a micro-mini-Budget, or whatever, to recoup the £25 million? I doubt it very much.
What is the difference in scale between £85 million and £25 million? I can work out the arithmetic, but in terms of the Budget as a whole it is roughly the same and within the margin of error. Why are we having this measure and long series of Ways and Means resolutions? That brings me back to my original point. The motion is before us because the Government are acting in a spiteful manner, because they are so annoyed and so peeved and are such a thrawn lot.

Mr. Proctor: Is it not true that the Government are introducing these measures because they want to control inflation but the hon. Gentleman does not?

Mr. Foulkes: I am not sure how putting up the price of cigarettes will control inflation. That seems a new thesis. That has never controlled inflation and it will not do so now. I am glad that the hon. Gentleman has given me the opportunity to say that it is not the case that we do not wish to control inflation. The record of the Labour Government in controlling inflation shows that they were successful in the last two years. Inflation was at a lower level when we left office than it is now, and it was coming down. The Government have put inflation up, and now take some credit for bringing it down.

Mr. Soley: I do not think that my hon. Friend understands the argument put by the Government. The Conservative policy works in this way: VAT is increased, so that inflation also increases massively, and then they wait for it to work through the system and claim to have brought inflation down. That is the principle on which they are working here.

Mr. Foulkes: I thank my hon. Friend for explaining the system to the House and to me. It certainly is a strange process. I knew that the Conservatives had "Alice Through the Looking Glass" policies and this is one.
Let us suppose that we have these "adjustments", this fiscal fine tuning, this mini Budget, which means that we have to find £85 million—though I do not accept that. Even if we accept that hypothesis, there are many more acceptable ways by which money could be raised—fairer ways that would ensure that the money is paid by those who can afford to pay.
In Committee I raised a number of questions about the oil companies and the fact that they were not paying the tax that they should be. We received some general but fairly mild assurances from the Minister that he would try to strengthen the measures for drawing in tax from the oil companies. We were not impressed by his assurances. It did not appear that anything substantial would be introduced in the near future, because of the lackadaisacal way in which the Government approached tax avoidance by major oil companies and supply companies.
If the Government undertook to raise the taxes that the oil and supplies companies should be paying with the same determination as they use when squeezing the few pounds to which they may not be entitled from the disabled, the pensioners and the unemployed, we would get not millions but billions of pounds. In Committee we put forward various arguments about ways in which the money could


be raised from the oil companies. It would try your patience, Mr. Deputy Speaker, and that of the House if I went through them now.
We also raised the whole question of the tax loophole for the Vestey family. One of my right hon. Friends said that the loophole was yards across and that we were trying to plug it with a plug only a few inches across. How does one plug a loophole with a plug? It is a strange concept. It was not made clear how the loophole would be fully plugged. The Vestey family will get away with a great deal more.
The Finance Bill contains a despicable proposal that group premiums for private medicine—BUPA and PPP—should have tax concessions. That will cost a substantial amount. The Government could have examined that area. That proposal could have been withdrawn.
I hope that my hon. Friend the Member for Workington, who has taken an interest in these matters, will develop my next point in greater detail. The concessions in capital gains tax and capital transfer tax are an outrage. They literally hand out millions of pounds to those who already have more than enough. In Committee we sat through the debates on a Bill that takes small amounts from the unemployed, the sick and those who can least afford to pay, but gives substantial tax concessions to companies and individuals, landowners and others, who already have far too much.
The more that we sat in Committee the more we saw Conservative Members not only supporting the tax concessions but arguing for more for the petrol companies, the banks, and the property companies—and the more sick we became. It was a revelation for those of us who had not served previously on the Committee of the Finance Bill to see the vested interests of Conservative Members working on behalf of their paymasters—whether banks, petrol companies or property companies.

Mr. Campbell-Savours: My hon. Friend raises an important point, which, unfortunately, many people do not realise. There was much discussion in Committee on that matter. What effect did that have on the Government? Will they come forward with concessions of a similar nature next year, or have they learnt that they cannot fool all of the people all of the time? One day the media will pick up the discussions in Committee and the amendments being moved by Government Back Benchers in the area of concessions.

Mr. Foulkes: I should like to be as optimistic as my hon. Friend and believe that we have persuaded the Government of the error of their ways. We had long, extensive, detailed and important discussions in Committee, but the media picked up only the trivia.

Mr. Teddy Taylor: Yes, the hon. Gentleman.

Mr. Foulkes: That was done especially by the popular media. We discussed important political issues hour after hour, day after day, and week after week, but those discussions were not reported by the media, with the exception of technical magazines such as Accountancy, Age and Investors Chronicle. The technical sector advised those who already have far too much money of ways in which they could make even more. We were given advice

and guidance by accountancy bodies and by all the organisations that represent the interests of, for example, financiers, banks and petrol companies. That advice and guidance was carefully scrutinised and we received considerable briefing. The details were picked up by the professional and expert media, which provide advice to those who want to make a bit more money.
I regret that the popular media did not pick up enough of the devastating way in which poor people will be hammered by the Finance Bill and the contrast between the way in which they will be hammered and the money that will be handed out to those who are far too rich already.

Mr. Campbell-Savours: Does my hon. Friend agree that when we were discussing capital gains tax provisions, capital transfer tax and the concessions that the Government intended to make, we did not attract much attention from the media? However, they grossly distorted an issue that arose in Committee when it was alleged that a member of the Committee had been listening to a radio—an allegation that was proved to be incorrect. All the national newspapers carried that story without consulting the individual concerned to establish the truth. They failed to deal with the real problem of the Chancellor's concessions.

Mr. Foulkes: My hon. Friend is right. The media tend to concentrate on trivia. I gather from some of the sedentary remarks of Conservative Members that the Tories blame those who were members of the Committee for what was picked up by the media. If Conservative Members read the proceedings in Committee, they will become aware of the detailed arguments which were presented by Opposition Members, which made clear the way in which the Bill will clobber the poor and provide handouts for the rich.

Mr. Austin Mitchell: Is that not exactly the lesson that is provided by the measure that we are debating? Who are the people who will smoke the cigarettes and use the tobacco that is to be subject to extra taxation? It will be smoked by those who are looking for work, by those who are still in work and by the less well off. The burden of taxation will fall again on them, while the wealthy will continue to receive the Government's handouts.

Mr. Foulkes: My hon. Friend is right. In Committee my hon. Friend played a rather unusual role for a Whip and made an extremely positive and helpful contribution to the majority of our debates. When we were discussing the substantial amount of extra taxation that the Government wish to impose on mopeds, my hon. Friend argued that such a tax would have its effect on the working class. He participated actively in the debates in which we emphasised that the Government were making tax concessions for the rich.
Throughout our discussions, when we learnt of the way in which the poor, the unemployed and the sick were to be taxed, only the Chief Secretary to the Treasury intervened. Perhaps I am giving him too much credit when I say that at times he sat in his place somewhat shamefacedly. None of the Conservative Back Benchers participated. They sat quietly looking away—

Mr. Campbell-Savours: And moving their amendments.

Mr. Foulkes: No. But when we reached the question of giving handouts to the people who already have too


much money, the Back Benchers thought that what the Government were doing did not go far enough and they came in with their amemdments to hand out more. If we must look for £85 million—

Mr. Campbell-Savours: My hon. Friend has referred to Conservative Members rising to their feet to move amendments. On one evening Conservative Back Benchers in the space of three hours, tried to extract from the Treasury an extra £480 million to safeguard their interests. My hon. Friend will recall that in one amendment the sum was £250 million. That was to be a concession for better-off people in society.

Mr. Foulkes: My hon. Friend the Member for Workington is underestimating the amount, which was over £500 million additional money which the Conservatives wanted to give away to the banks, the petrol companies and the property companies. During our discussions we also found that one of the hon. Members who proposed amendments was the director of a petrol company and one of the Conservative Members proposing amendments on land tax was a director of about 30 or 40 property companies.

Mr. Jack Straw: While we are on the subject of handouts to the rich and to the oil companies, will my hon. Friend confirm that the Social Democratic Party representative moved amendments which would have given away hundreds of millions of pounds to the oil companies? Beforehand he had no idea what largess those amendments would have involved.

Mr. Foulkes: On one of his rare visits to the Committee, the hon. Member for Thornaby (Mr. Wrigglesworth), who said that he was speaking on behalf of the oil companies, moved an amendment to give away money to the oil companies. It would seem that those who are switching their allegiance from the Conservative Party to the Social Democratic Party are perhaps finding kindred spirits there. I believe that a substantial number of votes will be taken away from the Conservative Party rather than the Labour Party by the Social Democratic Party. Perhaps I am being led astray from the motion. I was about to say—

Mr. Dennis Skinner: Will my hon. Friend accept that another large group of people is concerned about what the Government are doing in the Ways and Means resolutions, particularly the one which my hon. Friend is discussing? Although we shall take a decision tonight, the voters in Warrington will take one on 16 July. Incidentally, the Social Democrats are not here to represent the voters of Warrington—the pensioners who will be affected by the increase in the price of tobacco and all the other increases which will attack the working class people of Warrington. Those people will make the verdict at the end—although my hon. Friend is putting up a stalwart performance tonight—on 16 July when the issue

Mr. Foulkes: The voters of Warrington are a sophisticated electorate who know what sort of people they should support, as they have shown in the past. I am sure that they will understand the meaning of what we are saying tonight. We shall see a contribution to help towards reducing the PSBR, namely, the Conservative candidate's deposit, which will be a great boost to Government funds.

Mr. Teddy Taylor: At the end of a long speech, the hon. Member has spent 15 minutes complaining that the

speeches made in the Finance Bill Committee were not publicised in the popular press. He is now giving us his views about the Warrington by-election. Is not this a blatant filibuster and an abuse of the House?

Mr. Deputy Speaker: Order. That is for the Chair to decide.

Mr. Foulkes: As you have said, Mr. Deputy Speaker, it is for the Chair to decide. I wish that you had been here during the contribution of the hon. Member for Southend, East, which was far more irrelevant than anything we have heard tonight.

Mr. Deputy Speaker: Order. That is also for the Chair to decide. Let us get on with debating the motion.

Mr. Foulkes: I shall not accept any more interventions, Mr. Deputy Speaker.
In the Red Book there is a give-away in corporation tax of £56 million, in capital gains tax of £15 million and in capital transfer tax of £20 million. If my arithmetic is correct, the total is £91 million, which is more than enough to cover the £85 million, if we have to pay for it. Instead of putting additional tax on tobacco, bingo and gaming the Government should stop the handouts to those who already have far too much money. The means are available.
The Minister of State's refrain in Committee, day after day and week after week, was "We need the money". We were on the point of putting it to music. We now see £91 million which the Government apparently did not need. They were prepared to give it away to people who already have far too much. They could have found the money by those means without taxing people who can ill afford to pay additional taxes.
I oppose the Government's proposal. I do not believe that it is necessary. The Government are being spiteful because they did not get their way. They are saying to the House "If you will not do it this way, we shall make you provide the money in another way." That schoolboyish and vicious attitude pervades many of the Government's policies.

Mr. Campbell-Savours: My hon. Friend referred to the various interests of Conservative Members which were revealed in Committee. Did he see the press reports this morning of a likely rebellion on the Government Benches against the resolution? The hon. Member for Basildon (Mr. Proctor) may be among them. Perhaps we could be told privately whether the Conservative Members who intend to rebel against the Government have a direct interest in the tobacco industry, which may have been declared in obscure places of the House, and are rebelling to safeguard their private interests.

Mr. Foulkes: I must not stray too far down that path, although in Committee it was made clear that a large number of people had an interest in the capital transfer, corporation and capital gains tax concessions. It was also clear that it was for them to decide how far their interests prevented them from voting.
It was unnecessary to bring forward the resolution. I hope that I have helped to prove that. However, even if we are generous enough to give the Government the benefit of the doubt and say that there may be an inkling of a case for bringing the resolutions before the House, there are far better ways to get the money, which would not harm ordinary working people and which would get the money from people who are already far too rich. The


banks have excessive profits. In Committee, petrol companies were quoted whose profits had doubled and trebled. Other companies are paying far less corporation tax than we might reasonably expect. That is where we should be getting the money, and not from ordinary working people, who the Government are continually persecuting.

Mr. Michael English: There are several aspects to this Ways and Means resolution. One is the effect of the tax on the tobacco industry, in which I have an interest. It is not a financial interest, but in my constituency we have one of the largest tobacco interests in the United Kingdom—the John Player factories.—[Interruption.] Does the Chief Secretary wish to intervene?

Mr. Bob Cryer: The right hon. and learned Gentleman is attacking my hon. Friend in a disgraceful way.

Mr. English: I represent in a constituency sense the industry that the right hon. and learned Gentleman is attacking.
The second aspect was briefly mentioned by my hon. Friend the Member for South Ayrshire (Mr. Foulkes) when he referred to the spiteful nature of the resolution. I would say that it was done in a fit of pique.
Let us be clear about what is actually being done. In the 1980 Budget the general Government current receipts were forecast at more than £94 billion. In the 1981 Red Book, the Financial Statement and Budget Report, published much earlier this year, an outturn of £93·745 billion was forecast. That is in table 14 of the Red Book. The right hon. and learned Gentleman may say that he was not Chief Secretary then, bcause of the reshuffle. That is a difference of £370 million—a mere detail, I suppose, but it is 4·3 times the £85 million that we are dealing with here, and it is the smallest of the figures that I am about to quote.
To take a more interesting figure, the public sector borrowing requirement in 1980–81 was forecast at £8½ billion.

Mr. Skinner: The Government got it wrong by £5 billion.

Mr. English: As my hon. Friend says, they got it wrong, but they got it wrong rather more seriously than that. The estimated outturn in the Red Book was £13·5 billion. That is a difference of £5 billion. It is also 59 times the £85 million that we are discussing today. A later figure showed a lower PSBR. It may be only £12 billion, so we might say that the Government got it wrong by only about 50 times the figure that they are asking us to consider tonight.
To take a similar figure, general Government current and capital expenditure was forecast in the 1980 Budget as £100·8 billion. In the 1981–82 Red Book, the estimated outturn was £103·7 billion—a difference of about £3 billion or 35 times the £85 million that we are dealing with here.
I accept that one year's figures may not prove a great deal, except that they are so massively greater than the amounts under consideration today that they must prove something. Certainly the figures have obviously changed since the Red Book was published earlier in the year.
Let us take the average error in PSBR forecasts over the period 1967 to 1979, covering both Labour and Conservative Governments, which was 1½ per cent. of the gross domestic product. The average error in the forecast each year was roughly £3·5 billion in 1981–82 money terms. That is a fairly solid figure. In round terms it is 40 times the £85 million that we are considering today. I am talking not just about this resolution, but about all the resolutions together. As I understand it, £65 million relates to resolutions relating to tobacco and a further £20 million to the later gambling resolutions. Taken together, the £85 million is to replace the revenue lost on derv as a result of the Tory revolt.
The Government say that they can get the PSBR wrong by 40 times the amount that they are asking the House to waste its time on now. It would be nice if we could have a debate of this length on the Government's expenditure plans, but we do not have it. The Chief Secretary indicates that we do. Will the right hon. and learned Gentleman explain why we have the Procedure Committee, of which I am a member, sitting now to discuss how the House can regain control over expenditure?
We have no control over expenditure. The Government put forward proposals for expenditure. Private Members are not allowed to do so. In Commonwealth countries the rule on expenditure is that only a Minister may propose expenditure. The Minister may propose massive figures—

Mr. Skinner: A sum of £94 billion.

Mr. English: That was the figure in 1980. It has gone up since then.
Ministers may put forward massive figures. Back Benchers may not propose them, though they may propose reductions. If they do, the motions will go on the Order Paper and be ruled out of order. If a Back Bencher wishes to challenge an Estimate, he may put down a motion and there may be a vote upon it, but there is no guarantee that there will be any debate on it. That is what the Procedure Committee is discussing at present.

Mr. K. J. Woolmer: In dealing with the errors in forecasting the Government's borrowing requirement, my hon. Friend is perhaps being too generous to the Treasury. Are not all the major independent forecasters much more accurate at forecasting the public sector borrowing requirement than the Treasury is? Last year it was £5 billion wrong. I believe that it forecast £8½ billion and the actual figure was £13½ billion. How can we trust its judgment on a motion as modest as this?

Mr. English: I mentioned the £5billion, but I thought that my case that the Government's action was a fit of pique was strengthened by giving the average over the past dozen years, which, at current prices, is about £3½ billion.
I am prepared to accept that the Government did not anticipate the fall in revenue that has assisted in bringing their error above the average. They should have expected that their policies would cause a high level of unemployment and lead to a fall in revenue, but perhaps they did not expect that it would be of such an extent.
However, Mr. Deputy Speaker, I think that you would suggest that I was deviating if I went into the whole of the Government's economic policy. Later in my argument I may return to this point.

Mr. Skinner: So badly did the Government take into account the rolling average of £3½ billion out over a period of years, notwithstanding the £5 billion that they were wrong this time after being in office for less than two years, that I am beginning to come to the conclusion that my hon. Friend's case is as follows. If the Government can be out to that extent on one issue alone—the public sector borrowing requirement—it is not £80 million that they will come here for next. That is what they are asking for tonight on tobacco, which we are discussing now, with gaming, bingo and all the rest to come. The amount that they are putting on tobacco and so on for the voters of Warrington could be exceeded later on betting and gaming, and there might be more on petrol to come.

Mr. English: I think that that must be so, because the loss in revenue over the Government's forecast was small, only 4·3 times the £85 million that we are now talking about, whereas the change in the PSBR was £5 billion—59 times the £85 million.
The difference is public expenditure. In spite of what they have said and done, the Government have not carried out £5 billion-worth of the cuts that they promised last year, when they said in effect that they would cut public expenditure by a certain amount and have a PSBR of a certain amount. This year they have turned out to have a PSBR £5 billion greater than that. As I say, it is 59 times the amount which we are discussing on all these resolutions together.
I fear to contemplate what the consequences might have been if the Government's 1980 Budget had been carried out. Perhaps we could discuss that thought on some other occasion. Nevertheless, the basic change in the Government's Budget in the past has not been a paltry saving on derv, petrol or anything else by Government Back Bench revolts. The basic change has been a gross overspending by the Government on their own promises. I suppose that that is why the Chief Secretary is sitting on the Treasury Bench. He is supposed to be a hard man, capable of bringing some control back into the organisation.

Mr. David Stoddart: Does my hon. Friend remember 1977, when some amendments about the indexation of taxes were carried? On that occasion, due to Opposition Members, the then Labour Government lost £350 million in revenue which they did not seek to restore when the Finance Bill came back to the Floor of the House. We are talking about £85 million. My hon. Friend is right that this is really chicken feed to the Government in terms of their net borrowing requirement and certainly in terms of the £350 million which was lost in 1977. Can my hon. Friend comment on the damage which this proposal will do to the industry that he and I represent? I have a small factory in Swindon. Does my hon. Friend agree that for the sake of this relatively small sum of £85 million his constituents and mine will be put out of work or on to short time?

Mr. English: I agree with my hon. Friend. But let me comment on his first remarks. I know many right hon. and hon. Members on both sides of the House who like the former Labour Chancellor of the Exchequer, my right hon. Friend the Member for Leeds, East (Mr. Healey). I also know many who dislike him. But I have never heard anyone describe him as petty.

Mr. Skinner: A bully, yes.

Mr. English: This action is petty. Even my hon. Friend the Member for Bolsover (Mr. Skinner), who does not necessarily support my right hon. Friend the Member for Leeds, East on every item of policy, would never describe him as petty. He would say that he would accept defeat gracefully—

Mr. Skinner: He is always graceful.

Mr. English: —on a small sum such as this.
There is no doubt that the present Chancellor of the Exchequer and the Chief Secretary and their Cabinet colleagues think in this way, and I might point out that it is not the accepted way.
Earlier, I was talking about the interesting constitutional change that they were trying to introduce. If I may discuss the subject briefly, in the British Commonwealth procedure, quite unlike the American procedure, a Back Bench Member cannot propose an increase in expenditure. Nevertheless, the Government not only can propose an increase in expenditure but can, without the control of the House of Commons—that is why the Procedure Committee is sitting at the moment—even have a £5 billion excess on their own proposals for expenditure, because nearly all that £5 billion is on the expenditure side.
That is the British principle. The American principle is quite different. There, the President and the Administration may propose but Congress disposes. What we are introducing here is neither the American principle, where the legislature controls expenditure, nor the Commonwealth principle, where the Government do. We are having a very interesting principle. We are having the French principle.

Mr. Skinner: I thought that it was the Friedman principle.

Mr. English: A week or so ago, when the Foreign Office decided to cut the BBC's external sere ices to Western Europe, I thought that at last the Foreign Office was losing interest in the European Community. It is already the case that France spends twice as much on promoting the French language in Britain as we spend in France on promoting the English language. But there is the parable of the prodigal son. If the Foreign Office is suddenly losing its interest in the European Community and Western Europe, it is an interesting political thought. I cannot see why it wishes to reduce our influence in the European Community. I should have thought that we would wish to influence our European neighbours, whether we were in or out of the Community, but, apparently the Foreign Office, with the approval of the Chief Secretary, wants to cut that.
However, the Chief Secretary now wants to introduce the very interesting French constitutional principle. I am sure you are aware, Mr. Deputy Speaker, that the French constitutional principle is quite different from the American or the British. That information was produced for the Procedure Committee. Whenever a Back Bench member of the French Assembly proposes a reduction or an increase in expenditure he must propose a compensating amount. The principle that the Chief Secretary is trying to introduce is a slight modification of the French system. It does not matter whether he increases or reduces expenditure by £5 billion. It does not matter what the Government do, but if a Back Bencher,


especially a Conservative Member, dares to propose to reduce taxation or to alter the public sector borrowing requirement by a mere £85 million or £95 million, the compensating amount on the other side of the balance sheet must be introduced in the House of Commons and passed. We do not mind if it is petty—it is the principle.
The Chief Secretary said that he wanted to introduce a new principle. The Government want to get away from the Commonwealth procedures and the American principle and to introduce a procedure similar to the French Assembly's principle on finance. If they do, why do they not go the whole hog and allow us to propose expenditure increases? My hon. Friends the Members for Bolsover and Keighley (Mr. Cryer) could suggest a few interesting increases in expenditure which might help to put a few of their constituents back into jobs. I am sure that some of my hon. Friends who do not believe in tobacco smoking could think of some expenditures in Nottingham, West which would help some of my tobacco workers into jobs that might not be producing cigarettes. If we are to have a part of the French system, let us have the whole of it. Let us not have the pettiness on the part of the Government saying "We are allowed to spend £5 billion over our proposed public sector borrowing requirement. We are allowed to do anything we wish without the control of the House of Commons. We may do all these things. But if a Conservative Back Bencher suggests one modest petty alteration—one fifty-ninth of what the Government have done—we must instantly put it back to prove that they should not do it".
Let us suggest a few increases in public expenditure and a few alterations in taxation—all of them designed, I hope, to put some of the people now out of work back into work.
The Government do not even know where they are going in their economic policy. They started with a policy which worked in what they proposed. As a monetary policy it brought the confidence of the whole financial world to this country. It brought up our interest rates. Interest rates and the pound went up. Many years ago, oddly enough, Conservative Members would attack Labour Governments and Labour Members would attack Conservative Governments because of the constant decline in the pound combined with the constant rise in the German deutschemark. The Germans revalued the deutschemark every couple of years and we thought how splendid that was because of the strength of their economy. This Government came into power and the pound went up as a result of their increase in interest rates sucking money towards this country. Instantly there were protests from our exporters—so instantly that the Government took action to reverse themselves. They took action to reduce interest rates so that demand for the pound went down.
Now we hear protests not from the exporters but from the importers to this country who say "You are putting up our prices and people cannot afford to buy our products because 3 million are out of work". Now there are stories in the press that the Prime Minister has issued intructions to her economic Ministers—most of whom are lawyers, not economists—that the pound must not be allowed to fall further. British exporters who breathed a sigh of relief when the value of the pound went down will hardly be cheered by the news that in the opinion of the Prime Minister it must now go up. That reveals the inconsistency of these policies.
We are told that the Prime Minister does not go in for U-turns—only for modest, broad bends in the road.

Mr. Skinner: Zigzags.

Mr. English: This is a hairpin, and that is an appropriate analogy to the Prime Minister—a woman so feminine that she will not allow another woman in the Cabinet.

Mr. Skinner: I had not thought of that.

Mr. English: But the hairpin economic policy is not ideal for the country as a whole where some people are exporters and others are importers. There is constant lack of knowledge about where the Government want to go. We are now talking about the thousands of millions—the average of £3½ billion a year errors. We are not talking about the £85 million that honest Conservative Back Benchers dedided to save their constituents. Those are the figures about which we should be talking. But since seven o'clock until later this evening we are discussing a mere £85 million—one fifty-ninth of the Government's errors in their own PSBR.
Perhaps the Government are doing better than they said they were in March. Let us give them the benefit of some doubt and say that we are discussing one-fiftieth of what they have done. We should not be wasting the time of the House on this stupid resolution simply because the Government are frightened of their own Back Benchers. They have too large a majority.

Mr. Skinner: How will it affect Nottingham?

Mr. English: I shall come to that. The results of this stupid action of changing one-fiftieth of the Government's own change in the PSBR are considerable for my constituents, as my hon. Friend the Member for Bolsover is aware. He has constituents who work—my constituency, too.
Perhaps because of the health educaion campaign, the trend among men has been a decline in smoking. There is still an increasing trend among women, but broadly speaking the erstwhile increase in smoking that has been true for the last 50 years or even longer has stopped. For one reason or another, there was a fragile stability in the industry.
However, in this year's Budget the Chancellor decided to increase the tobacco duties. There was some scope for that. No one can deny that over the years tobacco duties have not been increased in line with inflation. As was mentioned earlier, the index linking introduced by some Conservative and Labour Members has been scrapped by the Government, but they have scrapped it for some things only. They like index linking for tobacco, but not for income tax or tax reliefs. They like it in respect of inflation-proof pensions which the 1971 Conservative Government introduced.

Mr. Skinner: They might stop it.

Mr. English: They are talking about it, but they will probably go on talking about it until the next election and do nothing about it.
I do not deny that there are arguments for index linking, just as there are arguments for increasing the tobacco tax. But there is no argument for letting the tax slowly decline in real terms and then having a sudden jump, because that is the way to upset a market, the sales of the product and employment in the industry.

Mr. Cryer: Does my hon. Friend accept that there is likely to be a long-term decline in the sale of tobacco products because of their association with ill health? Does he also accept that for the Government to pile on the tax in this way, without planning in any shape or form for alternative jobs, is yet another savage attack on the working class when there are already nearly 3 million people on the dole?

Mr. English: That is true, and I have some sympathy with shareholders in the industry who are singled out for different treatment from that given to shareholders in other industries. I have sympathy with them as well as with the workers, and I shall deal with both groups.
Sales in the industry had already gone down as a result of the original increase. This action has been taken for reasons of pique, the Government's fear of their own Back Benc hers and their desire to show that the Chief Whip is still in control of his Back Benchers. They are seeking to restore that control by these actions on the part of the Treasury.
That is why there has been an attack on the tobacco industry and on the gambling industry. Whatever else can be said about gambling, no one can claim that it injures health, even if it is said that tobacco injures health. The reasons for the two increases cannot be the same. But let us suppose that the Government had suddenly been converted by the junior Minister at the Department of Health and Social Security. Obviously, a junior Minister who is an old Etonian has an enormous influence on the Cabinet.
The Chief Secretary seems to find this amusing. He should realise that the Under-Secretary of State for Health and Social Security, who has campaigned to reduce smoking, has had a tremendous influence on Conservative policy. Full credit should be given to him for what he has done. Perhaps the Chief Secretary does not like him. But I suspect that when the Government were casting round for ways of beating their own Back Benchers over the head, some of the old Etonians in the Cabinet must have spoken to the old Etonian in the DHSS and asked him to think of something. It would appear that because his Department lost the battle in March and did not get the increase in tobacco duty that it wanted, it has responded by producing it again as a candidate for a tax increase.
None of these people cares about the effects on employment in the tobacco industry. That point was made by my hon. Friend the Member for Keighley. There has already been an effect as a result of the first Budget of this year, before we got to this second Budget. There has already been an effect upon the sales of tobacco products, and in particular upon employment in the industry. It has not, fortunately, been as bad as the effects of Government policy on employment in the cycle industry. At the Raleigh works in my constituency, hundreds of people were put on a two-day week. I had never heard of a two-day week until recently. I understand that some of them have now gone back to a three-day working week.
In the tobacco industry, people have suffered directly as a result of the Government's earlier action, and they are bound to suffer even more as a result of the subsequent action. All this is simply for the sake of restoring the control that the Chief Whip had lost over his own Back Benchers. Just because one Department lost an argument with the Treasury earlier in the year, and because some Conservative Back Benchers, being honest to their own

constituents, talked about the excessive cost of fuel in rural areas and won their argument, my constituents in Nottingham are now to be directly clobbered, merely to keep a junior Minister in the DHSS and a fairly inadequate Chief Whip happy.

Mr. Dennis Canavan: Very inadequate. He should resign.

Mr. English: As long as he maintains this rate of progress I want to keep him in his job. I do not mind if he is inadequate so long as he is on the opposite side of the House. There is complete disregard for the effects of one's actions which are taken for immediate, personal short-term reasons with no thought about what is happening in the country outside London.

Mr. Woolmer: Does my hon. Friend recognise that there would be some sympathy for increasing taxes of this kind if the money was spent on helping to create jobs? I understand my hon. Friend's concern about loss of jobs in his constituency. My hon. Friend the Member for Keighley (Mr. Cryer) and I have seen the textile and clothing industry lose 160,000 jobs under this Government. I see no possibility of a penny of this extra money being spent on helping those industries. I understand my hon. Friend's concern about the tobacco industry. I assure him that if those involved in industry in Yorkshire thought that the money would be spent constructively on industrial investment, there would be some sympathy for the proposal. All we see, however, is this money going down the drain, just like North Sea oil revenues, without helping to create a single job and simply helping to finance deflation.

Mr. English: This is an item that my hon. Friend and I have discussed many times in the Select Committee on the Treasury and Civil Service. I must declare an interest. I once smoked 80 cigarettes a day. In the past few years I have not smoked at all. If the State—the State and not just the junior Minister in the Department of Health and Social Security—decides that the tobacco industry should cease and close, the State should take appropriate steps to compensate workers and, for that matter, the shareholders in the industry. This is not simply an argument that I produce tonight. I have spoken many times on the issue. I have always produced this argument.
My hon. Friend the Member for Bolsover will recollect a time when the State decided that a number of pits should be closed and the force of miners reduced by hundreds of thousands.

Mr. Skinner: I was put out of a job.

Mr. English: My hon. Friend was put out of a job but, fortunately, the electors put him back in another one. That was an action of the Government of the day. The miners, remarkably, peacefully accepted it, just as the tobacco workers of Nottingham, remarkably, peacefully accept the actions of the Government in relation to them. It is not just. Since the time of the mining closures, to which I have referred, the principle of redundancy payments, introduced by the 1964 Labour Government in a 1965 Act, has been accepted.

Mr. Skinner: Just prior to the next election.

Mr. English: It was actually nearer the previous election than the next election because I served on the Standing Committee on the Bill. If the State wishes to do


these things it should take responsibility for its actions. Instead of playing abut with the taxation of tobacco, drink or gambling, the Government should say that, if they do not like gambling, they intend to go back to the law prohibiting gambling. If they do not like tobacco smoking they could say that they intend to close down the industry, compensate the people made unemployed and use the saving to the country which those at the Department of Health and Social Security say would arise because more people would be alive and able to work, to make sure that those people are given jobs. None of this has been considered. In a fit of pique, the Government introduced this proposal without doing anything about changes in the public sector borrowing requirement. They attack the tobacco workers and shareholders simply because they are upset by the fact that some of their own Back Benchers were honest enough to vote against them.

Mr. Skinner: Has my hon. Friend taken into account that the tobacco increase comes only 12 months after the Chancellor of the Exchequer packed up smoking himself? He did not put it up previously.

Mr. English: I am looking at the time, Mr. Deputy Speaker.

Mr. Cryer: The night is young.

Mr. English: The night is young only if the Government carry their Division at 10 pm. I understand that if the Government carry the 10 o'clock business motion we could be here for some time. I make no bones about it—I do not wish to continue debating after 10 o'clock. I am sure that my constituents would support me in that. For once, they would probably say "You should go home early, Michael, but you should make sure that there is no increase in tobacco duty." Certainly, they would agree that there should not be an increase, with all its effects on Nottingham, West, Bristol and other parts of the United Kingdom, just for the reasons adduced earlier.
The Government should be men enough to take defeat by their own Back Benchers. They should remember that their own errors and forecasts are 50 times bigger than the actions of their Back Benchers.

Mr. Woolmer: I am appalled to think that my hon. Friend believes that there will be a Division at 10 o'clock. Many hon. Members feel strongly about this issue. The Government appear to be moving the resolution because

they believe that a derv tax reduction must be counter-balanced. Is there any assurance that the increase in the cost of living for working people that the increased tobacco duty will cause will be offset by a reduction in the cost of living caused by the reduction in the tax on derv? This order will increase the cost of living for working people, but the reduction in the taxation on derv will not be felt at all. Should we not be pressing the Minister—

Mr. Deputy Speaker: Order. Interventions are becoming too long.

Mr. Cryer: It was a good intervention.

Mr. English: I agree. It was a good intervention. The tax will injure through their pockets smokers and those who produce cigarettes. How many increases in tax on tobacco or drink are passed on immediately? Has anybody ever experienced reductions in tax being passed on immediately?
The resolution should not have been introduced. It illustrates yet another reason for reforming our procedures. We should not equate an increase in one tax with a reduction in another tax. We should equate increases or reductions in tax with increases or reductions in expenditure and the need for a given public sector borrowing requirement. We should consider, as the Americans and French do, the introduction of a proper Budget every year. That Budget should tell us, on both sides of the balance sheet, exactly what we are spending and how we propose to raise the money. We should not need to spend hours discussing such a tiny matter when great matters escape us.

Mr. Ray Mawby: The hon. Member for Nottingham, West (Mr. English) said that we should be considering a Budget and its whys and wherefores. The reason for the motions is that a number of us decided that within the well-balanced Budget we should seek to reduce the tax on derv. We put to my right hon. and learned Friend the Chancellor of the Exchequer ways in which he could collect the revenue that he would lose from the 10p reduction in derv duty.

It being Ten o'clock, the debate stood adjourned.

BUSINESS OF THE HOUSE

Motion made, and Question put,

That, at this day's sitting, the Motions relating to Ways and Means and the Deep Sea Mining (Temporary Provisions) Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Goodlad.]

The House divided: Ayes 129, Noes 74.

Division No. 247]
[10.00 pm


AYES


Alexander, Richard
Hawksley, Warren


Ancram, Michael
Hayhoe, Barney


Baker, Nicholas (N Dorset)
Heddle, John


Banks, Robert
Henderson, Barry


Beaumont-Dark, Anthony
Hogg, Hon Douglas (Gr'th'm)


Benyon, Thomas (A'don)
Hordern, Peter


Benyon, W. (Buckingham)
Jopling, Rt Hon Michael


Berry, Hon Anthony
Kaberry, Sir Donald


Bevan, David Gilroy
Kershaw, Anthony


Biffen, Rt Hon John
King, Rt Hon Tom


Biggs-Davison, John
Lang, Ian


Blackburn, John
Langford-Holt, Sir John


Boyson, Dr Rhodes
Le Marchant, Spencer


Braine, Sir Bernard
Lester, Jim (Beeston)


Bright, Graham
Lloyd, Peter (Fareham)


Brinton, Tim
Loveridge, John


Brittan, Leon
Lyell, Nicholas


Brooke, Hon Peter
MacGregor, John


Browne, John (Winchester)
Madel, David


Bruce-Gardyne, John
Major, John


Buck, Antony
Marlow, Tony


Budgen, Nick
Mawby, Ray


Bulmer, Esmond
Mawhinney, Dr Brian


Butcher, John
Maxwell-Hyslop, Robin


Cadbury, Jocelyn
Mellor, David


Carlisle, John (Luton West)
Meyer, Sir Anthony


Carlisle, Kenneth (Lincoln)
Miller, Hal (B'grove)


Chapman, Sydney
Mills, Iain (Meriden)


Clark, Hon A. (Plym'th, S'n)
Moate, Roger


Clegg, Sir Walter
Monro, Hector


Cockeram, Eric
Morgan, Geraint


Colvin, Michael
Murphy, Christopher


Cope, John
Neale, Gerrard


Dean, Paul (North Somerset)
Neubert, Michael


Douglas-Hamilton, Lord J.
Onslow, Cranley


Dover, Denshore
Osborn, John


Dunn, Robert (Dartford)
Page, John (Harrow, West)


Dykes, Hugh
Page, Rt Hon Sir G. (Crosby)


Fairgrieve, Russell
Page, Richard (SW Herts)


Faith, Mrs Sheila
Pattie, Geoffrey


Fell, Anthony
Proctor, K. Harvey


Fenner, Mrs Peggy
Rees, Peter (Dover and Deal)


Fletcher-Cooke, Sir Charles
Renton, Tim


Fookes, Miss Janet
Roberts, M. (Cardiff NW)


Gardiner, George (Reigate)
Roberts, Wyn (Conway)


Garel-Jones, Tristan
Sainsbury, Hon Timothy


Goodlad, Alastair
Shaw, Giles (Pudsey)


Gray, Hamish
Silvester, Fred


Griffiths, E.(B'y St. Edm'ds)
Skeet, T. H. H.


Griffiths, Peter (Portsm'th N)
Speed, Keith


Grist, Ian
Speller, Tony


Gummer, John Selwyn
Spicer, Jim (West Dorset)


Hamilton, Hon A.
Spicer, Michael (S Worcs)


Hawkins, Paul
Stainton, Keith





Stanbrook, Ivor
Walker, B. (Perth)


Steen, Anthony
Waller, Gary


Stevens, Martin
Watson, John


Stradling Thomas, J.
Wheeler, John


Taylor, Teddy (S'end E)
Wickenden, Keith


Thomas, Rt Hon Peter
Williams, D.(Montgomery)


Thompson, Donald
Winterton, Nicholas


Thorne, Neil (Ilford South)
Wolfson, Mark


Townend, John (Bridlington)



Trippier, David
Tellers for the Ayes:


Viggers, Peter
Mr. Robert Boscawen and


Waddington, David
Mr. Tony Newton.


Wakeham, John





NOES


Allaun, Frank
McGuire, Michael (Ince)


Alton, David
McKay, Allen (Penistone)


Ashton, Joe
McKelvey, William


Atkinson, N.(H'gey,)
Marks, Kenneth


Beith, A. J.
Martin, M(G'gow S'burn)


Booth, Rt Hon Albert
Mikardo, Ian


Boothroyd, Miss Betty
Miller, Dr M. S. (E Kilbride)


Buchan, Norman
Mitchell, Austin (Grimsby)


Callaghan, Jim (Midd't'n &amp; P)
Morris, Rt Hon C. (O'shaw)


Campbell-Savours, Dale
O'Neill, Martin


Canavan, Dennis
Orme, Rt Hon Stanley


Clark, Dr David (S Shields)
Penhaligon, David


Cocks, Rt Hon M. (B'stol S)
Powell, Raymond (Ogmore)


Conlan, Bernard
Prescott, John


Cook, Robin F.
Radice, Giles


Cowans, Harry
Robertson, George


Craigen, J. M.
Ross, Ernest (Dundee West)


Cryer, Bob
Ross, Stephen (Isle of Wight)


Cunliffe, Lawrence
Sheldon, Rt Hon R.


Cunningham, Dr J. (W'h'n)
Shore, Rt Hon Peter


Davidson, Arthur
Skinner, Dennis


Dean, Joseph (Leeds West)
Spearing, Nigel


Dixon, Donald
Spriggs, Leslie


Eastham, Ken
Steel, Rt Hon David


English, Michael
Stoddart, David


Evans, John (Newton)
Straw, Jack


Foulkes, George
Tinn, James


Garrett, W. E. (Wallsend)
Wainwright, R.(Colne V)


George, Bruce
Watkins, David


Golding, John
Welsh, Michael


Hamilton, James (Bothwell)
Whitehead, Phillip


Hamilton, W, W. (C'tral Fife)
Wilson, Gordon (Dundee E)


Harrison, Rt Hon Walter
Wilson, William (C'try SE)


Haynes, Frank
Winnick, David


Hooley, Frank
Woolmer, Kenneth


Howells, Geraint



Kerr, Russell
Tellers for the Noes:


Lewis, Ron (Carlisle)
Mr. George Morton and


McDonald, Dr Oonagh
Mr. Ron Leighton.

Question accordingly agreed to.

WAYS AND MEANS

Tobacco Products (No. 2)

Question again proposed.

Mr. Mawby: Before we had the Division, I was explaining why the Chancellor had been required to introduce additional taxation measures. Opposition Members have spoken at great length. I think that my right hon. and learned Friend is setting the tobacco duty a little too high. The increase that was introduced in the Budget was about right. The additional 3p might be too much and the result may be that many will stop smoking. There are those in the House who believe that there should be a social tax on smoking. As a smoker, I do not believe that that is right.

Mr. Stoddart: I agree with the hon. Gentleman that the additional tax on tobacco and cigarettes in the Budget was swingeing enough. It is a disgrace that the Chancellor seeks to increase the tax yet again. The hon. Gentleman speaks about health. Is it not a fact that there are many other commodities, including butter, that are said by the doctors to be bad for our health? Is he suggesting that the Government should put a tax on commodities such as butter?

Mr. Mawby: We read many medical reports that suggest that anything that we eat or drink is bad for us. I merely say that the extra taxation on tobacco and cigarettes that my right hon. and learned Friend introduced in the Budget was about as much as the traffic would stand. Any additional increase will reduce the consumption of tobacco. Unlike Opposition Members, I do not need an hour to explain that.
I accept that it is necessary for the Chancellor to gain extra revenue by additional taxation. He should obtain it by taxing some other commodity. I mention casinos in passing. Of course, none of us has to smoke tobacco, whereas we have to use diesel and petrol. I ask my right hon. and learned Friend to look at other ways in future of finding alternatives to the tax, which must be collected.

Mr. Clive Soley: I do not believe that the Minister has made the economic case for this motion. There is a health case, to which I shall refer in a few moments. I do not believe that the Minister has made the case for that either. As a number of my hon. Friends have said, the resolution is rather petty as it is getting back at the Conservative Members who chose to persuade the Government in a forceful way to reduce the tax on derv by 10p.
We have had a classic case of the Minister coming to the House, putting on his best party smile and saying that this is the fine tuning of the economy. He then turns round to face the decrepit old car and does a Jekyll and Hyde act in which his face turns into an evil scowl, and he lashes out at that rickety old car and yet another bit drops off. This is about a bit of discipline in the Conservative Party and how to keep the troops from rebelling because they are not too happy.
In his opening remarks, the Minister came up with the famous old phrase that the motion is necessary because monetary and fiscal restraint is central to the defeat of inflation. However, the point is that the Government have not defeated inflation. They more or less doubled it as soon

as they came to office and it is still higher than it was when they took office in May 1979. By this resolution they are putting it up again tonight. Rightly or wrongly, cigarettes are in the RPI and it is pushed up. If they used the new measure—the PTI—the rate of inflation would be greater. There is a failure in the economic policy which they are trying to achieve. It is a basic failure.
It has to be said that we are now facing a more serious problem, which is unemployment. Although I would not say that unemployment was a direct cause of the type of violence which we saw at the weekend, no one can pretend that it is not a contributory factor. It is a contributory factor not least because it produces a ripe breeding ground for extreme Right-wing parties which have racialism as their creed. That is a much greater threat to the social fabric of this country than the rate of inflation.

Mr. Cryer: Is not that
precisely the point that the right hon. Member for Sidcup (Mr. Heath) was making so emphatically and is it not clear that members of the Conservative Party have been trying to gag him to prevent him saying that those economic policies—in his words—are promoting race hatred and crime?

Mr. Soley: Crime and race hatred in particular are being promoted by those policies. It is not only the right hon. Member for Sidcup (Mr. Heath) but the Home Secretary, who in January or February of 1978 or 1979 said that unemployment was one of the causes of crime and that we in the House bore a responsibility for it. The Government knew it then, yet the position is infinitely worse now. We cannot laugh off or dismiss a situation when unemployment is producing more of a threat than inflation to the social fabric of the nation.
I do not want to spend much time on the wider economic arguments. The monetary squeeze had the effect of pushing up interest rates in this country, which attracted hot money from abroad into what was already an overvalued sterling. That is largely responsible for the excessive crash in the domestic economy which we have experienced. That is also being emphasised by the Government's economic policies.
I turn to the issues that we raised on the Finance Bill, which my hon. Friends who served on the Committee with me will remember well. We put it to the Minister time and again, just as I did tonight to hon. Members on the Conservative Benches, that, if the Government wanted the money, they could get it from those who had it, not least in capital transfer tax. As a result of the Budget, a parent can bequeath £50,000 tax-free every 10 years to his child, yet the Government are introducing this measure. As has been said, in Committee we spoke against the excessive burden being placed on people with low incomes, while the load on people with high incomes was lightened. We challenged the Minister again and again to justify that, but he did not. The only justification appears to be that, if the load on high taxpayers is lightened, the economy will be regenerated as those people will invest in industry, but there is no evidence of that.

Mr. Ian Mikardo: All the evidence is that the rich people and companies that benefited from the tax concessions invest a large part of their money overseas.

Mr. Soley: That is right. It is said that investment will come back later in the form of profits, but that does not make up for our collapsing industrial base, which has added massively to high unemployment.
When the Finance Bill was in the House previously, Conservative Members remained silent about the issues affecting the low paid, but, suddenly, at about 1 am, our discussion switched to the retrospective tax on bank profits.

Mr. Campbell-Savours: Conservative Members were set alight.

Mr. Soley: Conservative Members poured into the Chamber and rose like trout to the evening fly, one after the other. They got uptight not only about the tax itself but also about the fact that it was retrospective. We have a Government not only of mass unemployment and inflation. They are becoming the Government of public and civil disorder, which are associated with those factions, and they are now the Government of retrospective legislation. That is the nature of the Budget.
If the Government wish to be consistent, why did they not put the additional tax on high tar cigarettes? In fact, they took the extra tax off high tar cigarettes. I hope that the Minister can explain that.
There is a strong health argument for increasing tax on cigarettes. My hon. Friend the Member for Glasgow, Springburn (Mr. Martin) believes that we should have legislation dealing with other manufacturing processes that cause health problems, and I agree. However, if we wish to eliminate or reduce the use of tobacco, we should encourage the companies to diversify and, above all, retrain the workers in the industry on a wage similar to their current wage.
The health case, which the Minister sadly has not made, is important. I put it to hon. Members on both sides that if tobacco had remained unknown until today we should take a different attitude. Let us suppose than an hon. Member or a Minister is sitting in his advice surgery when a man looking remarkably like Sir Walter Raleigh comes to see him and says that he has been to a far-off land where he discovered that the natives used this weed. The hon. Member would wonder whether this was another of those rather odd cases that one gets at surgeries from time to time, but he would give such a person the benefit of the doubt and ask him to explain. He would be told that in the far-off land they grow plants, which are then cut and hung up to dry until the leaves and stalks are all brown and shrivelled.

Mr. John Golding: How does my hon. Friend find time to deal with people telling stories about weeds from foreign lands with so many people waiting outside with housing problems, supplementary benefit problems and social security problems, and the queue for hospital beds and so on? How can he justify devoting his time to this Sir Walter when so many of his constituents have far more important problems than simply having had a tiff with the Queen?

Mr. Soley: If my hon. Friend comes to my surgery—indeed, I invite him to do so—he will find that he has to deal with people of this kind because they are somewhat persistent and will not go away. That does not lessen the time that one gives to the others whom he rightly describes as having housing problems, unemployment problems and so on.
Our latter-day Sir Walter Raleigh will explain that having dried the leaves and let them become crinkly and brown one then pounds them up with a bit of sulphur or tar and a few other ingredients and mixes them all up together. By this time the Member of Parliament will be looking distinctly worried and reaching for his telephone in case the person is violent as well. Sir Walter then explains that one rolls the mixture up in a piece of paper, sticks it in one's mouth and sets light to the end.

Mr. Anthony Beaumont-Dark: Bob Newhart did it better.

Mr. Soley: I think that the hon. Gentleman is confusing Bob Newhart with Tom Lehrer. Whichever it was, he will recall that in that case it was put into one's ear, not one's mouth.
The hon. Member would then ask the latter-day Sir Walter what effect this had. He would explain that initially it makes one choke and cough, one's lungs go hot and one feels terrible, but that after a few hundred or a few thousand one begins to feel that one's day cannot begin or end without a cigarette and one has reached a state of happiness that one would not otherwise have known.
The Member of Parliament might then ask about the long-term effects. Let us assume that our latter-day Sir Walter had some extra knowledge that the original Sir Walter did not have. He would explain that one is more likely to suffer from a heart condition, that one will almost invariably have a severe bronchial condition and that one is considerably more likely to die of lung cancer.
In those circumstances, would any hon. Member be prepared to allow that drug into the country? The answer is almost certainly "No". The same applies now to cannabis, which is probably safer than ordinary tobacco, although that does not make a case for allowing it and we would not do so. There is, therefore, a strong case, if the Minister wishes to use it, for an increase in tax on cigarettes. But that has absolutely nothing to do with the case that he is making—unless, as has been suggested, it has more to do with another Department's wishes and is a way of disciplining Tory Back Benchers as well as getting his £83 million or £85 million back. That is what it is really about. If we extend the principle too far, it becomes absurd.

Mr. Foulkes: Does not my hon. Friend agree that the Chief Secretary cannot advance the health case, because it contradicts his basic argument about raising more revenue? If the right hon. and learned Gentleman is advancing a case for reducing consumption by increasing the tax, he must accept that that decreases the revenue. He is trying to convince us, with not much success, that he will obtain more revenue.

Mr. Soley: The Minister is in even worse trouble. He is trying to say that it is not a matter of health but is to get inflation down. The tax goes straight into the RPI. It is nonsense.
I am beginning to think that this tobacco tax is bad for the Minister's health—his mental health, if not his physical health. It is a logical absurdity, on the basis of his own argument.
I do not wish to pursue the matter further now. Other matters need to be raised later. The proposal is an economic absurdity, although underneath it there is a good argument on health and social grounds.

Mr. Austin Mitchell: The Chief Secretary mentioned my right hon. Friend the Member for Leeds, East (Mr. Healey) and his mini-Budgets. I know that the Government are anxious to avoid any imputation that they introduce mini-Budgets, but they are getting into the habit. If what we have before us is not a mini-Budget, it is certainly a micro-Budget. It is one of those endless appendices and footnotes to the Chancellor's measures that we have come to expect.
The Chancellor's motives are essentially petty. On behalf of his right hon. and learned Friend, the Chief Secretary is administering a public chastisement to those Conservative Back Benchers who were brave enough to threaten to vote against the Government and force them into the humiliating retreat from their asinine proposals on derv. Now those hon. Members have to be reprimanded and punished, and that is what is happening. It is the Chancellor's revenge.
We are dealing with a motion that shows who is boss, a motive from which I would not dissociate the Prime Minister. The action smacks of the schoolmarm, the governess, the nation's elocution teacher. Such a motive is not only unworthy. At this stage, it is counter-productive to increase taxation.
The Chief Secretary talked about restoring the integrity of the Budget. That is one of the biggest jokes around at present, apart from the expectation of introducing later this year the invisible miracle. To restore the integrity of that besotted harlot, the Budget, is an achievement well beyond the efforts of the Chief Secretary.
The Government's action is the result of an obstinate adherence to economic policies that are already discredited and of a perverse desire to punish. That demonstrates only the obsessive deflationary zeal of this Government rather than anything to do with economic sense or restoring integrity. When the Government talk of restoring the Budget's integrity, I think that the lady doth protest a great deal too much. The Government are simply reinforcing their original mistake in a Budget that was too deflationary. Obstinacy in the pursuit of folly, although the Prime Minister might like to preach it as virtue, is folly rather than virtue.
It is generally agreed that the economic impact of the Budget was already far too deflationary. Indeed, the Budget was improved by the Government's concession on derv. Now the Government have made the deflationary impact greater still.
The united chorus of protest that greeted the Budget cannot have been equalled in recent history. The TUC and the CBI joined in condemnation. A former president of the CBI talked of the Government's squeeze on jobs and profit. The Manchester chamber of commerce described the Budget as
woefully inadequate … nothing to boost economic activity in the North-west".
The Times talked in an editorial of
fiscal measures in the Budget which amount to a further deflation of £3·3 billion, which would, other things being equal, promise a further reduction in output and an increase of perhaps 200,000 in unemployment.
It is clear that this is massive deflation.
The Times, which originally proposed and propounded monetarism and helped to make it fashionable enough for this Government to take up in the first place, now tells the Government that their monetarist Budget is far too

deflationary and will lead to another 200,000 becoming unemployed, and when The Times economics editor, David Blake, points out that the main burden of this Budget is, by trimming the economy in this fashion, to try to make the Government's own figures look reasonably consistent with the predictions of last year, and when he tells us that the Budget is certain to push down output and to push unemployment up by defying economic logic, it is clear that the deflationary impact has been far too great and the essence of this policy has been disastrously deflationary.
These measures add to that deflationary impact, and that is the strongest possible argument for resisting each of them. They deepen a deflation which the Government themselves have produced. It is no use the Government saying that this is their method of fighting inflation. Their only method of fighting inflation, apart from putting it up as they have done incessantly by VAT increases and tax increases such as this, has been to allow the pound to rise as it has done steadily since the Government took office, and by allowing sterling to rise they hope to fight domestic inflation by bringing down the price of imports. I am reminded of the Prime Minister's famous advice to Austin and Pickersgill to cut their costs by importing more components.
That is the economic logic of the Government's fight on inflation. It is a fight, therefore, carried on at the expense of jobs. But the fight on inflation is not the logic of it. Nor is world depression. Why should we be the first to go into this world depression and far deeper than any other country, when we should be well shielded by oil?

Mr. Soley: We were going into it before it started.

Mr. Mitchell: My hon. Friend is right. We went into it before it started and we went into it deeper, when we should have been shielded as never before by being self-sufficient in oil.
The logic of the deflation which the Government have produced is simply and solely to break the negotiating power and industrial muscle of the working class and the trade unions. It is the Government's substitute for an incomes policy. That is their muscle, which they are trying to strengthen by this kind of deflationary measure. They will not have an incomes policy. They do not like to deal with the unions. They do not like the unions. So they feel that they have to break the power of the unions by deflation and by the increase in unemployment that that produces arid which the Budget has accelerated.
There are two consequences of a policy of this kind, one of which we face tonight. It is the inevitable increase in unemployment that the Budget has accelerated and that will be increased further by this measure.
It is no good the Conservative Party posing as the party of tax reductions. The party of deflation, depression and unemployment is the party of high public spending and of high taxation. The biggest cause of the increase in public spending that we are having to finance is the unemployment which the Tories have generated by their economic policies. That will guarantee the Conservatives remaining the party of high taxation which is engaged in a constant battle for further economies in other sectors of Government spending to try to finance the unemployment and the increasing costs in the nationalised industries that have been generated from the depression which they have produced.
The "We need the money" syndrome, so characteristic of the proceedings on the Finance Bill, is a direct result of the Government's policy. They need the money, in large measures. The Budget has demonstrated the "We need the money" syndrome with taxes on lighters, matches, mopeds, chewing tobacco and banks and their failure to raise the allowances. All these taxations, petty and large, are a direct consequence of the Government's deflationary strategy with the increase in public spending and the increased need for taxation that that produces.
The Budget has seen the Government—and these motions see them again—scraping the bottom of the barrel for the kind of money they need to finance the economic disaster they have produced. Every petty form of taxation has been increased in the Budget. Yet as my hon. Friend the Member for South Ayrshire (Mr. Foulkes) pointed out the Government have cut capital taxation for their supporters—the wealthiest and best-off section of the community, which has done well out of the Budget. The Budget has effectively dismantled capital taxation.
Increases in taxation such as this are inevitable in the Government's policy. We also see the launch of the next drive of economies on which the Chief Secretary has already unsuccessfully—one gathers so far—embarked. He is probably too nice for the job. But, from a predicted target of £3 billion-worth of economies in Government spending, he has already retreated to the present estimated target of £1 billion cuts in public spending. That demonstrates the impossibility of the job that he has. Of the two "ancient Brittans", the other, who writes for the Financial Times, has much the easier job. It is far easier to demand cuts in public spending or impractical economic policies from the security of a column in the Financial Times than it is to fight for them in a Government who have entered the depths of this depression as the Government have. This sort of measure is forced on them by their economic policies and strategies. That does not make what they are proposing right—it merely heightens and deepens the folly of what they originally proposed in the Budget.
The other consequence of the Budget and these motions, as well as the increase in taxation and the desperate search for economies, is further unemployment. A direct consequence of that is the sort of events we have seen this weekend in Liverpool and Southall and that we saw earlier in Brixton. As my hon. Friend the Member for Hammersmith, North (Mr. Soley) pointed out, if unemployment is not the immediate cause, it is a major cause. It does not necessarily trigger off violence, but it is present as a dominant factor in the background because people relegated to despair have no other way of demonstrating that despair. That is bound to lead to the sort of events we saw in Toxteth, Southall and Brixton.

Mr. Soley: We should not let that point go by without saying that the main problem is that despair provides a breeding ground for the Right-wing racialist organisations, because the other ethnic minority groups can be used as scapegoats, in much the same way as the Jews were in Nazi Germany. The problem is racialism, but racialism is always compounded by unemployment.

Mr. Mitchell: The problem is complex, as my hon. Friend says, but despair is the inevitable consequence of Government policies and the increase in unemployment that they generate. Despair is a breeding ground for

negative actions, hostility and the fostering of the sort of hate that my hon. Friend mentioned. Despair increases with unemployment. We shall see further developments of that nature. Because blame is the apostle of the Prime Minister, she will seize her opportunity to apportion the blame in a divided and embittered society produced by the sort of economic policies that the Government have generated.
Those are the consequences of a Budget and measures that produce unemployment and which increase a rapidly rising unemployment. It was not a Budget that nipped a recovery in the bud, but it takes money in taxation out of an economy already in deepening recession. That made the recession worse and helped to heighten the unemployment which produced the despair about which I was talking.
Before the Budget, Ministers were suffused with a kind of optimistic glow. They said that the depression was bottoming out and that the invisible miracle was on its way. According to the Chief Secretary, night would follow day in economic regeneration. All that was based not on any economic forecast, prediction or necessity but simply on a declaration of faith that recovery must come, because they were praying for it. It was a question of faith rather than of economic laws.
There was nothing in the Government's policies to produce the kind of recovery which they said was on its way. In fact, their policies made such a recovery impossible and ruled it out. Every forecast since the Budget has predicted deepening gloom. No one has upheld the Chief Secretary's predictions or those of any other Minister. The National Institute's forecast was perhaps gloomiest of all because it demolished all the indicators of better times on which the Government were so desperately relying, and it put the trough of the depression back from 1981 into 1982.
In addition, we had the forecasts of the CBI, the OECD and even the London Business School—last, loneliest and most loyal—which did not bear out any of the Minister's predictions.
Therefore, the economic situation since the Budget has got worse, and the predictions have become more depressing. All the arguments were for changing course, not for reinforcing the Budget and for restoring its integrity, or whatever public relations phrase the Government care to choose. The arguments were for changing the Budget round and weakening its impact on the economy.
Peter Jenkins in The Guardian painted an image of Labour activists wanting a Labour Prime Minister lashed to the wheel of a Labour Government vessel tied to its course. Of course, instead of writing commentaries on the Warrington by-election, Peter Jenkins should be standing in it because he is more of an advocate for the Euro fun party than he is objective critic.
That image of a Prime Minister lashed to the tiller with the ship set on course is directly relevant to the situation in which the Government now find themselves, with Mrs. Queeg on the bridge frantically clicking balls, the crew increasingly mutinous and the ship headed straight into the storm.
All the evidence points to the need for increased Government spending and a cut in the burden of taxation. We should stop taking money out of the economy, with all its depressing inflationary consequences. We should reduce taxation and expand by borrowing more. We should stimulate the economy to get those vital resources,


particularly in construction, back to work. That is the economic strategy at which we should be aiming, not the strategy of deepening gloom which this measure proposes.
Despite the forecasts, the real economic situation is frightening and is becoming more so. In spite of the slight drop in the value of the pound, we are still disastrously under-competitive and unable to continue the one-third of production which is currently exported. The prospects are deeply gloomy.
That is the first reason why we oppose the motion. We oppose it because it takes more money out of an economy that is already in far too deep a depression. It does nothing to stimulate the economy at the moment when it desperately needs stimulation. The Government should have acted in the way that the Labour Government did in 1977 and accepted their defeat with good grace. They should have kissed the money goodbye, as the Labour Government did. The then Chancellor of the Exchequer was not wildly enthusiastic about giving up the increases in petrol duty, but it helped to add to the stimulus of the economy and to the expansion of the economy which ensued in 1978. The present Chancellor of the Exchequer could do the same by not pressing this increase in taxation.
The next basic argument relates to the position of the tobacco industry and the problems produced for it by the increase in taxation. I am well aware that there is a strong health-moralistic argument for increasing the tax on tobacco, provided that the burden is being shifted from other areas. After all, taxation on tobacco is a voluntary tax in that people do not have to smoke. It seems to be true that substantial increases in taxation on tobacco help to combat the habit of smoking and reduce the amount of smoking. Perhaps we should be grateful for that.
I am alarmed that the figures indicate that, although smoking is declining among men, it is increasing among women. According to the title of a recent book, "Smoking is a feminist issue", and I am sure that that is true. It would seem that the tensions imposed on women in modern society are driving them to smoke more, so that they take those tensions out on themselves and on their own health and well-being. That is a tragedy and one would not want to encourage the process.
There is, therefore, a strong argument for taxing tobacco, and I appreciate the argument as a non-smoker who is married to a smoker. I am fed up with waking up every morning to the smell of stale cigarettes from ashtrays around the bedroom. If the Government were really concerned about the health argument, they would have increased the differential taxation on high-tar cigarettes. Instead, they have abolished it.
In tonight's considerations we should leave aside the question of health, because the Government have already massively increased taxation on cigarettes—14p on a packet of cigarettes is a substantial increase by any standards. The problem that we now face is the too sudden adjustment that has been imposed on the industry. The further increase in tonight's motion is too massive. The tobacco industry employs about 40,000 people directly, as well as helping to support about 300,000 other people who are involved in the retail outlets for tobacco.

Mr. Golding: When my hon. Friend is attacking his wife for using ashtrays in the bedroom, will he bear in mind that not only are the jobs of cigarette makers at issue?

There are those of the people in the pottery industry who make ashtrays. Will he take that into account in pursuing in public these domestic disputes?

Mr. Mitchell: I am grateful to my hon. Friend for that correction. But my wife is one of the biggest consumers not only of cigarettes but of ashtrays, because most of the ashtrays are heaved out of the window by a bad-tempered husband who, in the morning light, cannot stand the smell of ashtrays filled with cigarette ends.
There is a large volume of employment in the industry and it is the responsibility of any Government who use the industry as a mulch cow, in the way that this Government have chosen to do, to make proper arrangements to transfer people to new work or to create alternative employment for the people in the industry.

Mr. Cryer: Cannot the Government's confusion be summarised as a lack of any indication that people may expect a better life when these incomprehensible policies come to an end? Does my hon. Friend agree that this was a pretty good summary by the right hon. Member for Sidcup (Mr. Heath)?

Mr. Mitchell: I do not wish to continue talking too much about my wife. If, however, one of the reasons for smoking is anxiety and the fact that the more anxious the person the more that person smokes—I am not sure whether it is related to going back to the breast—the Government's economic policies and the resulting unemployment should have led to a massive increase in smoking. The strains imposed among women might account for the increase in smoking among women.

Mr. Mikardo: Has my hon. Friend noticed that, while there has been considerable increase in smoking among women, there has been an enormous increase in the taking of tranquillisers by women? Both are evidence of the anxieties imposed upon them by what the Government are doing to them.

Mr. Golding: Is it not true that, if one had a husband who threw ash trays out of the window, one would want to take tranquillisers?

Mr. Mitchell: There is no answer to that.
The original question concerned the right hon. Member for Sidcup (Mr. Heath). I do not know whether his smoking has increased, given the attempts to repress his freedom of speech made by the Conservative Party. So great would be my anxiety about the Government's economic policies if I were a Government Back Bencher that would probably take up smoking large numbers of cigarettes.
The tobacco industry employs about 40,000 people directly. Another 300,000 are employed indirectly in retail outlets. Already, following the Budget, the Imperial group has laid off 5,000 people for up to two weeks at seven of its factories. Gallaher's has asked for short-time working from 6,000 of its workers at six factories. BAT and Carreras were better shielded by their success in exports but also face a situation in which they would have to move to short-time working as sales fell. There is no doubt that sales have fallen and that they will fall further as a result of this measure.
Sales of cigarettes have gone down each year since 1973. It is no coincidence that there have been substantial increases in taxation during that period. In 1980, total sales were 12 per cent. down on 1973. The Government


had anticipated a drop of 9 per cent. in sales of cigarettes following the Budget. The immediate consequence, in fact, was a drop of 15 per cent. I recognise that the figure may now have levelled off at just over 11 per cent. There can be no doubt that the Government's predictions will be falsified by the greater fall-off in smoking as a result of the Budget coupled with this measure.
Prices of cigarettes in this country are already substantially higher than those in most other EEC countries. The Government constantly make EEC comparisons. They say that the price of petrol is around the average for EEC countries, although I believe it is slightly higher. Why do they not inform the House of the price of cigarettes in the EEC? In the United Kingdom it costs just under £1 for a packet of 20 cigarettes. The price in Belgium is 44 pence, in France 27 pence, in the Federal Republic of Germany 62 pence, in Greece 21 pence, in Italy 31 pence, in Luxembourg 35 pence, in the Netherlands 47 pence and in the Republic of Ireland 63 pence. In most Common Market countries the price of cigarettes is much lower than it is here. Yet the tax content here is substantially higher. It represents over three-quarters of the price.
Sudden and unpredictable lurches—and no doubt there will be more as the Chancellor continues his desperate search for money—are playing havoc with the forward planning and profits of the industry. Hon. Members might be critical of the tobacco industry, but it is involved in a massive process of diversification. Food processing in Grimsby is an example of diversification. Tobacco has generated the funds to finance many other industries. To strike at the tobacco industry is to strike a blow at other industries associated with it.
The industry has been successful in its exports. It has also succeeded in combating imports. Only about 2 per cent. of cigarettes sold in Britain are imports. That is a record of which any other industry would be envious. Keeping import penetration down to 2 per cent. is an achievement.
However, that success has been based on a stable home market. That is being threatened by the sudden and unpredictable actions of the Government. They are a threat to a successful and wide-reaching industry and have repercussions for other industries.
Social priorities are also involved in the Budget and tonight's measure. The Budget benefits the rich and those with capital. It dismantles the structure of capital taxation, particularly as it applies to land. Massive handouts were made in the Budget. The Government, who needed money, were not averse to making massive handouts to their friends and supporters. The price of such handouts is to be imposed on the sections of the community which are least able to bear the price.
Who smokes the cigarettes? They are the pensioners and the poor. Consumption of cigarettes by the middle class has reduced in the last decade but it has held steady among manual workers. We are talking about the poor and, increasingly, women. They are being taxed to pay for the give-aways and handouts in the form of capital transfer tax. That is being done to demonstrate the virility of the Chancellor and to chastise the naughty boys, such as the hon. Member for Aberdeenshire, East (Mr. McQuarrie) who rebelled earlier.

Mr. Cryer: Does my hon. Friend accept that the way in which the Government are treating the House in

attempting to crush their Back Benchers is reflected in the way that they have been trying to gag the former Prime Minister, the right hon. Member for Sidcup (Mr. Heath)? It is to the right hon. Gentleman's credit that he has said that he will speak out against the Government's disastrous policies. Other Conservative Members should be prepared to speak out against this monstrous motion.

Mr. Mitchell: I deprecate all attempts to tell anyone to shut up and not to say what is on his mind. The right hon. Member for Sidcup has been treated shabbily by members of his party who are taking out on him the fact that they were too weak and frightened to say the obvious themselves. They will pay the price at the next election.
The Government's proposal will tax the less-well-off and those, particularly pensioners, who are addicted to the comfort and relaxation that a cigarette affords them, and it will have marked inflationary consequences. The Government say that they are fighting inflation, but they put up prices. The logic of that escapes me.

Sir William Clark: Any logic would escape the hon. Gentleman.

Mr. Golding: Has my hon. Friend considered that the inflationary impact of the Government's proposals will be particularly severe because the pocket money of many men and women will be regarded as inadequate, particularly in the light of still further price increases that we shall be debating later? Working men will demand wage increases because of the squeezing of their pocket money. There will be a significant impact on the ability of working men and women to manage on the pocket money that they allocate themselves from inadequate wages.

Mr. Mitchell: There is no danger that the logic of the hon. Member for Croydon, South (Sir W. Clark) will escape me, because he has demonstrated none, either in the Finance Bill Committee or tonight.
My hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) makes a valid point. If the number of women smokers is increasing, their demands for more housekeeping from their husbands will have the usual knock-on effects.
There is no possibility of fighting inflation by increasing prices. The Government's so-called achievement, after two years of agony and mass unemployment, in getting inflation down to the level that it was when they came to power is threatened by the rise in the value of the dollar and the corresponding decline in the value of the pound, which will increase the price of imports. Adding to those problems an unnecessary increase in the price of tobacco is unrealistic and stupid.

Mr. Woolmer: My hon. Friend is being far too generous to the Government. The infamous prices and taxes index is well over 3 per cent. higher than the RPI and the motion before us will add yet another twist to the PTI and will increase the cost of living by far more than the Government admit. Why do we not hear so much from the Government about the prices and taxes index? Could it be because it is increasing by so much more than the retail prices index?

Mr. Mitchell: I have been distressed by the silence on the taxes and prices index. I had hoped to hear more about it. No doubt when the Financial Secretary next visits Geneva to make one of his speeches away from the prying


eyes of the British media he will tell the remainder of the world, when we cannot hear, how well Britain is doing and unveil his thoughts on the taxes and prices index.
The more direct and immediate impact is on the retail price index, which will rise again after all the agony, torment and toll of bringing it to its present level. For the Government to do that with a quite unnecessary increase in taxation, simply to show their virility and to chastise their own Back Benchers, perverts the purposes of economic policy and the morality that the Prime Minister has made her peculiar branch of economics.

Mr. Joseph Ashton: Are there not consequences other than economic? Has my hon. Friend thought about sponsorship? The cigarette companies sponsor such events as the world snooker championship at the Crucible in Sheffield. Far more people watch that event on television than watch Wimbledon. Lack of sponsorship would have a devastating effect. Twenty-nine cinemas are to close because of economic difficulties and the lack of advertising from cigarette companies. The public will be deprived of snooker championships, cinemas and other sponsorships. That will take the quality of life from the ordinary working people. The Government want to bankrupt cigarette companies.

Mr. Mitchell: My hon. Friend is correct. We shall discuss the fate of the cinemas later when we reach the motion relating to increases in the bingo levy. Bingo has kept many cinemas in being as institutions. Even that precarious survival is threatened by the Government. The tobacco companies cough up a great deal of money—just as their customers cough up in other ways—to finance sponsorships both in sport and, in the case of the Crucible and other activities, in culture.
The financial position of the tobacco companies—they have always been good money spinners, almost as good as commercial television—is threatened by a Government who say that they will regenerate business initiative and the spirit of enterprise but who are threatening even the most sound and secure of companies. That is a measure of the Government's economic policy—[Interruption.]

Mr. Golding: I hope that my hon. Friend will take advice from those of us who have been here for many years. Do not be intimidated by Left-wingers and Front-Bench spokesmen. Let the rank and file speak loudly on behalf of working people who object to this iniquitous tax.

Mr. Mitchell: I am grateful to my hon. Friend. Advice of that nature from a member of the national executive is compelling advice indeed to an insecure Member such as myself.

Mr. Cryer: My hon. Friend has dealt with the economic arguments pretty well. We have with us the compound of ignorance and prejudice from the hon. Member for Aberdeenshire, East (Mr. McQuarrie). He has shouted out "cancer"—among other remarks—several times. My hon. Friend commented on that difficulty. It is unquestionable that ill health arises from smoking. Over the long term cigarette smoking is bound to decline. My hon. Friend commented on alternative jobs being provided and planned for by the Government, instead of this sudden vicious onslaught when almost 3 million are unemployed.

He metioned his concern for the social consequences. As the hon. Member for Aberdeenshire, East has joined us—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. The hon. Gentleman knows that interventions should be brief.

Mr. Cryer: I was concluding, Mr. Deputy Speaker. I wonder—[HON. MEMBERS: "Speech".]

Mr. Deputy Speaker: Order. The hon. Gentleman has made his intervention.

Mr. Mitchell: I am grateful to my hon. Friend the Member for Keighley (Mr. Cryer) for his intervention. There is an argument for increasing the taxation on tobacco because of the health consequences of smoking. However, transitional increases must be planned and regularised. There should not be the sudden and unpredictable lurches that we see from the Government in their desperate search for new sources of revenue to finance the economic disaster that they have generated. That approach to the problem negates its own objectives and achieves none of our health objectives.
The consequences of the motion are unplanned, ill considered, unnecessary and inflationary. All these ills will be suffered in the pursuit of an economic policy that was wrong when the Government adopted it in 1979. That has been demonstrated by the deepening recession and the worsening economic situation that have been evident since then. It is a policy that has produced unemployment that will rise to 3 million this year. It has produced a fall in industrial output greater than that which occurred between 1929 and 1931. It has obliterated one job in every eight in industry since the Government took office. The economic folly should have been stopped long ago.
The Government deepened the depression by their Budget. They now choose to go to the limit in chastising their Back Benchers by deepening the depression still further. That demonstrates the wilful folly, the obstinacy and the petty-mindedness of the Treasury Ministers and the asinine motivations of the Government's policies.

Several Hon. Members: rose—

Mr. Robert Sheldon: I merely intervene in the debate. It is an intervention that will not stop my hon. Friends from making their contributions, to which I look forward to listening. We shall be interested in the reply—I trust that it will be full—of the right hon. and learned Gentleman the Chief Secretary to the Treasury to this interesting and important debate.
On 30 April the announcement was made that the tax on derv would be reduced. The Chancellor stated that he had no option but to ask the people to bear the cost in some other way. The Chancellor has decided to recoup the tax that was lost on derv. He will do so largely from the tobacco industry. We have had important contributions from my hon. Friends the Members for Glasgow, Springburn (Mr. Martin) and for Nottingham, West (Mr. English).
The tobacco industry has had considerable difficulties. Not content with the increased taxation that he introduced in the Budget, the Chancellor has decided to have another bite at the same element of taxation. The industry hardly had time to accustom itself to the first assault before the second assault was launched. It had barely dealt with the


fall in consumption caused by the first bite of additional taxation before the second bite took place. It feels it is merely the plaything of an errant Chancellor.
My hon. Friend the Member for Hammersmith, North (Mr. Soley) referred to the health issue. It should be stressed that the Finance Bill seeks to repeal the surcharge on high-tar cigarettes. That was mentioned by my hon. Friend the Member for Grimsby (Mr. Mitchell). It will also increase the taxation on cigarettes generally. Therefore, the arguments for the health aspect, which we debated in Committee, must be seen in the context of a further increase in taxation different from what we saw in Committee, which was a reduction in at least one aspect of the taxation on cigarettes.
The Chief Secretary said that he saw nothing to invalidate the decision to recoup the £85 million which was made earlier in the year, in April. That was over two months ago. I find it astonishing that the Chief Secretary to the Treasury should come to the House seeking to convey the accuracy of the Budget arithmetic, not as it is today but as it was three and a half months ago. Those who hoped that it would be possible to fine tune the economy know full well the derision with which that was met in the 1950s and 1960s and the jokes and the sarcastic comments about the impossibility of fine tuning the economy which came from the Conservative Party at that time.
In these resolutions tonight there is fine tuning of a sort which no one previously conceived of—one-tenth of 1 per cent. The Chief Secretary says that there is nothing to invalidate the decision to recoup that element in the Budget judgment as he sees it several months later. He is as certain now of that accuracy as he was then.
It is necessary to get that phoney accuracy into perspective. We saw in 1979–80 that the forecast for the amount of revenue to be raised was £51 billion and £13 million. That was out by £2·3 billion. The following year the error was £1·4 billion. Those figures are enormous sums in comparison with the £85 million which the Chief Secretary says is the figure which will be out as a result of the changes.
What we have heard today convinces us, if we needed any further conviction, that the Chancellor of the Exchequer and the Government have limited vision. Not only do they look to the candle ends but, as we saw in Committee, they have been trying to get increases in revenue out of matches, lighters, chewing tobacco and Tupperware parties. They have been concerned with the trivia and have failed to look at the important matters on which Chancellors of the Exchequer should be spending at least part of their time.
The Chancellor of the Exchequer reminds us of a Dickensian bookkeeper perched on his high stool, his quill poised to ensure that the figures tally and without a thought for the accuracy or even the existence of the figures which he sets down in his ledger.
The Chancellor of the Exchequer has, I regret to say, an essentially static view of the economy. He looks at it in March and again in July and sees the same thing. Iain Macleod observed that a Finance Bill in July never looked the same as a Finance Bill in March or April. He was right. It does not. Since March there have been a number of important changes. We have seen the dollar decline, inflation rise, a new French Government with a new economic policy, and unemployment increase. We have seen those major changes, but the Chancellor of the

Exchequer does not see those differences. He runs the economy on a theory and all he believes he has to do is to implement that theory.
If that is all that is required, we as politicians, as potential Ministers and as people who try to run the country's economy must hand over the operation to civil servants and economists. If they are going to be in charge of those matters and there is to be an automatic pilot, at any rate we should have the best expertise available. It used to be said that the Chancellor of the Exchequer should drive the economy on the seat of his pants. However, in our view, the Chancellor of the Exchequer does not even seem to be able to look out of the windscreen.
Last December the Financial Secretary said that the upturn was upon us, but we have waited for month after month and it has not happened. In a speech to the Institute of Fiscal Studies on 23 March 1981, the hon. Gentleman said that he was quietly confident about control over the economy. We are aware that he is confident of everything that he does, but the fact that he is quietly confident passes the understanding of all who know him. When he talked of output on a rising trend, he failed to take into account the fact that destocking may not slow down. It may still have some way to run.
Industry has two reasons to subsist on stocks lower than anticipated. First, interest rates have penalised those holding even limited stocks. Stock levels that industry was accustomed to suddenly proved too large for the high rates of interest. Secondly, under the Finance Bill the clawback of stock relief will be much more limited. Previously, if stocks ran too low, there was the danger of tax being clawed back. From 10 November, that was largely ended. Firms can reduce stock without endangering their tax relief. Those two considerations may mean that destocking will be greater than the Chancellor estimated.
A constant refrain in our debates is that the Chancellor needs the money—to our shame—because of the high and rising cost of unemployment. That is a major element of the expenditure that he has to provide. The Chief Secretary assesses the cost of each individual unemployed as £3,500 per annum. Multiplying by the number currently unemployed, the figure is something more than £10 billion.
It is interesting to compare that figure with the benefits received from North Sea oil. The royalties, petroleum revenue tax, the supplementary petroleum revenue and the corporation tax this year total between £5 billion and £6 billion. That is the reputable estimate of Phillips and Drew and others. The revenue will rise next year and the year after. In two years' time, it is likely to be more than £10 billion, which is about what we are spending on unemployment. It is a coincidence that could have been devised by the Devil himself that the benefits from North Sea oil could go directly to keep the unemployed walking the streets in despair. The danger and disgrace is that the North Sea oil revenue will not benefit industry and be a source of prosperity to be shared by the whole community. North Sea oil is a means by which we can pay unemployment benefit to those who are out of work. What a blow that is to our hopes and what a blight to our expectations.
The £85 million itself will pay for about 20,000 people unemployed, or one-sixth of the 123,000 increase which brought the total to 2·6 million last month. Conservatives used to quote regularly the dictum about money fructifying in the pockets of the people. It is now money being taken


by the State to compensate our people for the jobs that the State itself has taken away. The money taken in taxation is not being used for the great schemes of public enterprise, the great municipal ideas of the nineteenth and twentieth centuries or the great electric grid system plans of the 1930s. The money taken in taxation is withering on the boughs of the State. We are living off the investment of the past and not providing the benefits for the future.
The Chancellor of the Exchequer claimed that the £85 million to be raised in revenue is related to the concession on derv. It could be said to be related to the concessions in the Finance Bill to the banks and the better-off. It could be said to relate not to derv but to the cost of the dispute with the Civil Service and the Government's unilaterally abandoning the pay research unit operation. By a surprising coincidence, the cost of interest charges on the £4 billion to £4½ billion revenue which is not being collected due to the dispute is about £85 million—the amount for which we are asked to vote tonight. It might also be related to five days' cost of the increase in unemployment last month. Finally, £85 million is only a small fraction of the £75 billion-plus that the Chancellor expects to raise this year.
The £85 million is not to recoup the money lost on derv. My hon. Friends the Members for Hammersmith, North and for Nottingham, West are quite right. The Chancellor wants to teach Conservative Back Benchers a lesson and to show himself a firm Chancellor to his colleagues and to the Cabinet when he goes to them for further expenditure cuts.
The House should not be taken in by the Chancellor's strength of purpose and resolution. It should scorn this foolish attempt of bugetary accuracy and vote against the absurd measures placed before us tonight.

Mr. Mikardo: On a point of order, Mr. Deputy Speaker. When my hon. Friend the Member for Grimsby (Mr. Mitchell) resumed his seat after his very interesting speech, my hon. Friends the Members for Batley and Morley (Mr. Woolmer) and for West Stirlingshire (Mr. Canavan) rose. You clearly and audibly called my hon. Friend the Member for Batley and Morley. After you had called him, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) rose and in some way which I do not understand you changed your call. You had called my hon. Friend the Member for Batley and Morley, who had a right to be heard. I cannot understand how you managed to withdraw that call. Would you be good enough to explain to me whether it is your view that a right hon. Member who rises after an hon. Member has been called has precedence? Will the rest of the proceedings be merely a debate between the Front Benches? Is it not the business of the Chair to protect all hon. Members, not least Back Benchers? Finally, if it is to be a debate between Front Benchers only, is there any reson why the rest of us should stay?

Mr. Deputy Speaker: The hon. Gentleman has been here long enough to know that it is by no means unusual for a Front Bench spokesman to be called if he rises. As soon as I saw the right hon. Member for Aston-under-Lyne (Mr. Sheldon) had risen, I called him.

Mr. Brittan: I find it slightly amusing that there should have been so much reference to teaching Back Benchers a lesson. I cannot help feeling, from some of the more recent altercations, and viewing some of the to-ing and fro-ing, that the business of teaching lessons is more actively occupying the attention of the Opposition Front Bench than the Government Front Bench. The invention of this as an explanation of what the Government are about is a product of a febrile imagination turned in on itself and reflecting on its own activities. However, I shall intrude no further on this matter, and I shall revert to the subject matter of the debate.
There are a number of different bases on which objection has been made to the measures that the Government are putting before the House tonight. The first, and in a sense the most fundamental, is the proposition that the Government's Budget judgment was wrong in the first instance. I understand that, but the time to debate it was during the debates on the Budget and on the Finance Bill. The House will understand if I do not revert to them.
The second proposition, and a related one, is that in some sense the situation has changed since the Budget and that the attempt to correct the changes made in the essential Budget judgment by the alterations in the derv rate of duty are inappropriate because of the changes in the economic situation since the Budget. If that argument had any relevance, I could see its force and one should have regard to it. But I do not accept that the analysis given mostly by the right hon. Member for Leeds, East (Mr. Healey), who speaks principally on these matters for the Opposition, and most recently by the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) is a correct analysis of what has happened to the economy since the Budget. It is at best an incomplete one.
The Government do not give a formal unemployment prediction, as has been made clear in recent debates. The change that the right hon. Gentleman referred to was in a Government Actuary assumption. One can make fun of the distinction between an assumption and a forecast, but there is indeed a distinction. Leaving aside that distincton, the difference was a comparatively limited one of 100,000, which could not possibly be regarded as invalidating the Government's strategy as a whole. I put it no higher than that.

Mr. Shore: We are not talking about a small matter, nor about simply a forecast. The Government Actuary has to do something more than make a forecast; he must make a plausible and carefully thought out assumption, because on the basis of his assumption and estimate of the future national insurance revenues have to be raised. In the three-month period, that assumption about unemployment has risen by 100,000. I said that to the cost of that to the PSBR could not be less than £400 million to £500 million during this year. If that is so, how can the right hon. and learned Gentleman say that nothing has changed in the assumptions that underlay the Budget three months ago?

Mr. Brittan: I do not deny that the assumption is genuine. I am merely putting it in context. I was going on—and that is why I was reluctant to give way to the right hon. Gentleman when I did—to the relevance of the changes.
One has to look at the picture as a whole, and it is not one which the Government seek to present in an unduly


rosy manner. I do not accept that that is a criticism which can be levelled. The picture as a whole is that the evidence that the right hon. Gentleman gave of the state of the economy is not very accurate or precise. It does not take account of the fact, for example, that the April industrial, manufacturing and production figures provide the firmest evidence so far that output has stabilised over the past three to four months after the sharp falls in the second half of 1980.
Anyone reading the totality of the reports of the economy will say that it is interesting that, in the short period since I became involved in these debates, the balance of the argument has shifted. Whereas earlier those who cavilled at the Government's strategy and policy doubted whether the low point had been reached or would be reached, now it seems that those who are no more sympathetic to the Government than they were before but have to recognise reality are complaining that even if the bottom point has been reached they see no evidence of a recovery.
That is a very different proposition, and it is one which again we can debate. But, even if we look at the unemployment indicator, which lags behind the production and the output ones, the June figures show a very significant slackening in the underlying rate of increase. [Interruption]. Both right hon. Gentlemen are too sophisticated observers of the economic scene to attempt to palm off a jeer at an examination of the rate of increase. They know that, although that is no consolation to those joining the unemployment register, equally it cannot be disregarded.
Broadly speaking, the picture is the one foreseen by the Chancellor of the Exchequer at the time of the Budget. The right hon. Member for Stepney and Poplar (Mr. Shore) elaborated and extrapolated the implication, as he saw it, of the Government Actuary's assumption. In an interesting later part of his speech, he said that, in effect, the Budget judgment was falsified by the fall in the sterling rate which in his view had inflationary consequences or implications.
To the extent that that is so and to the extent that the picture has had the effect that the right hon. Gentleman described, that is not an argument for reflation. It is quite the reverse. If inflation is more of a risk as a result of the changes that have occurred, that is an argument for taking a tighter stance both from the monetary and from the fiscal points of view. Therefore, what he says does not flow.
I leave the macro-economic argument and turn to the suggestion—

Mr. English: rose—

Mr. Brittan: I am afraid that I cannot give way to the hon. Gentleman at this stage. Even if the macro-economic judgment need not be changed—

Mr. English: rose—

Mr. Brittan: No. I am not giving way.

Mr. English: It is an open-ended debate.

Mr. Brittan: It is an open-ended debate, and the House has had the benefit of listening to the hon. Gentleman for a considerable time. I take account of the fact that the hon. Gentleman did not see fit to be present for the opening of the debate and did not hear me or his right hon. Friend the Member for Stepney and Poplar.

Mr. English: I was attending a meeting of the Select Committee on the Treasury and Civil Service.

Mr. Brittan: I am not blaming the hon. Gentleman. I am merely observing that he did not hear the beginning of the debate.
It is suggested that, even if the macro-economic argument holds good and there is no justification for differing from my right hon. and learned Friend's assessment on that basis, there is no point in trying to replace the £85 million that was removed because of the derv change because one cannot fine tune it to that extent.
I hope that I dealt with that matter fairly by saying candidly that I am not pretending that that estimate of the consequences of the budgetary picture is so precise that one has it right within a few million pounds here or there. That was not the way I put it to the House. The right hon. Gentlemen know that, because they heard what I said in my opening remarks. Although one is not being precise in that sense, the Chancellor has to reach a judgment about what he should do. It is his judgment and he is entitled to tell the House that if it is disturbed by the view of the House he can put it right subsequently. That is not an unreasonable view to take and it has led to the present measures.

Mr. Robert Sheldon: But what might have been correct in April—because that formed the judgment on the nature of the revenues expected and the expenditure that the Chancellor would make—will not necessarily be the same in July. That was the point that the late Iain Macleod made. When one takes into account what has happened with the dollar, in international affairs and domestically, that sort of accuracy is spurious.

Mr. Brittan: I agree, but if there have been changes, those might be reasons for changing the Budget judgment. It is for that reason that I dealt first with the suggestion that the Budget judgment should be changed.

Mr. English: Will the right hon. and learned Gentleman give way?

Mr. Brittan: I might, if the hon. Gentleman will allow me to finish my sentence.
I have dealt, first, with the the general Budget judgment. I accept the view that, if matters have moved on so much that that judgment has been disturbed, one might feel that things should be changed. I am now dealing with the £85 million on the basis that I am seeking to persuade the House to take the view that there is no basis for altering the Budget judgment.

Mr. English: If the Chancellor got the 1980 budget judgment wrong by £5 billion and did nothing about it, why should we think that he will do anything about this Budget?

Mr. Brittan: I should not put it that way about the 1980 Budget. It would take a long time to explain fully what happened. This is the first occasion that I have quoted myself, but in the debate on the public expenditure White Paper the factors that led to the change are clearly set out and are explained fully. On reflection, the hon. Gentleman will accept that it is a question not of misjudgment, in the sense of miscalculating the effect of individual measures, but of events supervening which were not in operation at the time.

Mr. Foulkes: If the Chief Secretary is correct in saying that Budget judgments are as valid today as they were when the Budget was announced and he is making fine tuning to the extent of £85 million, which he says is


justified, will he make further fine tuning to the extent of £25 million which will take account of the give-away in bank windfall tax?

Mr. Brittan: No.

Mr. Foulkes: Why not?

Mr. Brittan: I shall explain. I take it that the hon. Gentleman wants an explanation as well as an answer. I am sure that he wants the answer before the explanation, otherwise I shall be accused of not giving the answer. The estimate of the revenue arising from the bank tax was approximate. The hon. Gentleman waves his hand as if that was some fantastic concession, but it was made absolutely clear that this was a one-off measure. One cannot expect to estimate the consequences of doing that as accurately as changes in well-established revenue measures.
I take the points made by several hon. Members, including some of my hon. Friends, about the good aspects of the tobacco industry, such as its industrial relations and employment benefits. I also appreciate the difficulties that the industry has been facing. I revert to what I said earlier, that the difficulties that the industry has been experiencing have largely been caused by the problems arising from the high purchases before the Budget and the forestalling of the Budget.
I accept that the effect of this measure will be that the 9 per cent. to which I referred will become 10½ per cent. I fear that it has that consequence, but I assure the House that I shall bear in mind the points that have been made about the industry.
The higher tar surcharge was removed because it had largely achieved its effect. Consumption of higher-tar cigarettes had been reduced to a quarter of 1 per cent. of the total cigarette market. The abolition of that surcharge involved a loss of revenue of less than £1 million.

Mr. Austin Mitchell: rose—

Mr. Brittan: Perhaps the hon. Gentleman will bear with me. He held the House for 45 minutes, and I am sure he had an opportunity to put forward at least his best points, if not all his points.

Mr. Robert Sheldon: Nothing would have stopped the right hon. and learned Gentleman from reducing the tar level at which the supplementary tax took effect. It was originally placed at 20 milligrams, and there was nothing to stop that being reduced so that the Government could have retained the revenue from that useful supplementary duty.

Mr. Brittan: I have indicated that the level was extremely small. Therefore, I do not think that the right hon. Gentleman is making a substantial point, although it is a real point.
It was suggested that an easy way to raise the revenue would have been to clobber the rich who, it was alleged, were given all these benefits. If hon. Members look in the Red Book at the forecasts for 1981–82 of the effects of the capital transfer tax and capital gains tax changes, they will find that that argument is strong on prejudice and emotion but a bit short on figures and logic.
If one takes into account everything done in Committee, the net effect of the proposals in the capital tax sector will be a cost of £5 million in the coming year

but a gain of £15 million in a full year—the saving from the anti-avoidance measures exceeding the cost of the reliefs proposed by the Chancellor.
Therefore, these measures do no more and no less than what the Chancellor foreshadowed on 30 October and recoup in the fairest possible way the changes to his Budget judgment made by the alteration in the derv tax level. A general change to the Budget judgment is not called for. Such a change is not produced in these resolutions, nor would it be justified. But these resolutions are the implementation of the 30 April announcement and are reasonable in that sense.

Mr. K. J. Woolmer: I was not present at the beginning of the debate and I apologise for that, but I have been here for nearly four hours. Having the opportunity to speak after the Chief Secretary, I can only say that I found his defence of the measure totally unsatisfactory and completely unconvincing. I do not think that he can have convinced anyone with an impartial mind of his reason for seeking to raise the sum of £65 million. I waited for him to produce a reason, but he failed to do so.
I would be willing at any time to consider voting for an additional tax if I could be persuaded that it was necessary, but after several hours of debate we have been given no convincing explanation. My hon. Friends have challenged the Chief Secretary to explain why, when we have a Budget with an uncertainty of hundreds if not thousands of millions of pounds, it is thought necessary to come to the House to ask for a tax which can only raise the cost of living and involve a loss of jobs and which in the end can raise only £65 million of revenue.
The Government's record is one of total uncertainty as to the consequences of their policies. In their first full year in office, an error was made in their financial estimate of the borrowing requirement. The figure involved was £5 billion. I therefore cannot accept the Chief Secretary's argument that the measure is necessary. Indeed, when he sought to justify it to the House, he did not pretend that the Budget judgment was so precise that he needed to raise this extra revenue. His explanation was that the Chancellor of the Exchequer has to reach some judgment and that, having reached it, he has to stick to it to the tune of £65 million. He further explained that if that was disturbed by the House—by which I presume he meant defeated by his own Back Benchers—he would have to take it out on somebody, not because he needs to do it and not because the Budget judgment can be so precise but because he must teach the House a lesson. I think that that is a fair way of putting it. He has to teach his own Back Benchers a lesson and to teach the Opposition and the country that if he says something he means it.
Since the Budget was introduced—and this measure, it is argued, is justified because it is designed to set the Budget judgment back on course—so many things have happened that to pretend that £65 million has to be raised in this way defies credulity. The pound has changed significantly since the Budget. Are we to be told that it has had no effect on the Budget judgment? Interest rates in the world economy have increased substantially. Investment has slumped. Unemployment has risen. No doubt other hon. Members have read in the last day or so the judgment


that is being reached by other people—that unemployment is now significantly above the estimate at the time of the Budget.
Are we to be told that these various changes that must have had an impact on the Budget judgment of hundreds of millions of pounds will be swamped? I would be more convinced if hon. Members were faced by a series of measures representing an attempt by the Chief Secretary to alter course and to take account of changes since the Budget judgment. Instead, hon. Members are confronted by the Government's obstinate refusal to take account of the changes that have occurred. We face a total irrelevancy and a harking back to the good old days of the Budget when, in fact, many things have altered.
We need now what the Opposition were urging at the time of the Budget—not further deflation but expansion of the economy. The Government should have accepted in good grace the reduction in the duty on derv as a start in the direction of reflation. A sum of £65 million or £85 million is not excessive. No one outside the Chamber doubts that if any erring is required it should be on the side of expansion and not further deflation.
The Chief Secretary was defensive about the capital transfer tax and decried the amount that it raised. I have noticed in Standing Committee on the Finance Bill the sensitivity of Conservative Members on that matter. Why, if it is so insignificant, have the Government considered it necessary, at a time when further imposts are put on working people, to introduce such a tax? If taxes are to be raised, why has this method been chosen?
Many of my hon. Friends have commented upon the impact of this measure on the tobacco industry and the pottery industry. It should be recognised that many industries are up in arms over the Government's policies. Yorkshire has experienced a collapse in engineering and in textiles and clothing. There is uproar over the policies because of the unemployment problems created. I hope that the industrialists who have been lobbying hon. Members in the last few hours over the measure we are discussing will think about the resources that they contributed towards financing the Government at the time of the general election. What they now see, in terms of loss of employment in the tobacco industry, is what those in Yorkshire have seen in terms of engineering, textiles and clothing for many months. The number of jobs lost in the textile and clothing industry alone since the Government came to office—160,000—has been quoted many times.
I recognise the argument that further deflation is not required. I wish that many hon. Members and many of the industrialists who have been lobbying us had recognised the inevitable consequences of Government policy two years ago. I am aware of the need to strike a balance between the problems of health and the argument for increasing this form of taxation against the job losses that are inevitably involved. I am extremely wary of the danger of moralising about tax policy.
I should be impressed by the arguments for the tax if—and this is why I shall vote against it—there were a reason for levying it at this time. I see no reason why such taxation should be levied now. It will increase the cost of living, and that will hit the lowest paid most. It will cause a loss of jobs and is unnecessary. If the Government want to ask for an endorsement of a change of direction, they should ask for confirmation that there is no requirement to replace the loss of revenue through derv and ask the House

to oppose the change. I hope that the House will oppose a measure which can only increase the cost of living for the average person.

Mr. Dennis Canavan.: In the last Parliament the then Chancellor of the Exchequer made secondary, or mini-Budget, proposals and there were cries of protest by Conservative Members about a Treasury which, they said, was incapable of planning 12 months in advance. The then Opposition said that it was an example of the Government's incompetence in planning. Yet, at a time when the present Finance Bill is not even on the statute book, the Government have proposed this additional financial measure. I am surprised that we do not hear cries of protest from Tory Members who jumped up in protest about previous Ministers and Treasury officials whom they described as incompetent bureaucrats.
The Government have been forced to capitulate because of pressure from their Back Benchers, notably from the hon. Member for Aberdeenshire, East (Mr. McQuarrie). Having had their backsides bitten by the "Buchan Bulldog", the Government are determined to muzzle the doped bulldog and put him back into his kennel by introducing measures such as this motion.
Following an unprecedented increase of 14p in the price of 20 cigarettes, there is to be another increase of 3p. That is supposed to bring in most of the money that the 'Treasury will lose as a result of the announcement last week about the proposed increase in the price of derv being cut by 10p per gallon.
The Government hope that the increase will bring in about £65 million a year. I am not sure that we can put any faith in Treasury estimates, but I am informed that the public sector borrowing requirement is about £13 billion. That means that we are debating only about half of 1 per cent. of the total PSBR.
I do not know how the Government can calculate as closely as that. On past performance there does not seem to be such a level of arithmetical or economic genius in the Treasury at any level.
The sum that we are discussing is a mere drop in the ocean compared with total public expenditure—less than one-tenth of 1 per cent. I do not understand why we are wasting hours of parliamentary time on this snivelling little motion. The money could easily be found from the Contingencies Fund or from an increase in public borrowing.
There are signs that the Government's proposal may in fact be counter-productive. It is nonsense to imagine that we can keep on taxing the tobacco industry without adversely affecting consumer demand and, therefore, reducing the Government's revenue. There is a danger that we will kill the goose that lays the golden eggs. The Government's proposal will also be inflationary.
The 3p increase in the price of a packet of 20 cigarettes will add 0·1 per cent. or 0·2 per cent. to the RPI, but, taken with the 14p a packet increase in the Budget, the effect could be as much as a one percentage point increase in the index. That would be a significant increase in the rate of inflation at a time when the Government claim that they are reducing the rate—even though it is still above the rate that they inherited from the Labour Government in May 1979.
Several of my hon. Friends have referred to the deflationary effect of the Government's proposal on the


whole economy. That has its most measurable human impact in the increase in unemployment. The Player's factory at Stirling is in my neighbourhood. It is situated in the constituency of my hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing), but it is one of the major employers of my constituents as well as his.
Because of that firm's fears of what the Government will do, I was invited to the factory recently to discuss the problem with representatives of the management, the Tobacco Workers' Union and other unions with members at the factory. The tobacco industry faces similar problems to those confronting other industries because of the abysmal failure of the Government's economic and industrial strategy represented by high energy costs and interest rates and the collapse of whatever development policy they may have started out with.
The Stirling travel-to-work area, in which the Player's factory is situated, was singled out by the Secretary of State for Industry for relegation from development area status. The result is that one of the major employers in that area of high unemployment faces further difficulties because of the increased taxation on tobacco and is already considering a reduction in the number of jobs in its factory, hoping that that can be achieved, in consultation with the trade unions, through natural wastage. But that was before last Thursday's announcement of the order that we are debating. It will add another 3p to the price of a packet of 20 cigarettes. That will mean a reduction in the employment opportunities for the hundreds of workers employed in the factory in my area, as well as the thousands of tobacco workers employed at other factories in Scotland and other parts of Britain. I hope that the Minister will pay attention to those points. He has not given any real estimate of the measured effects on employment—or unemployment.
When I visited the factory, representatives of both management and trade unions told me specifically that any further attempt to recoup the money lost by forgoing part of the increase on derv by a further levy on tobacco would have a detrimental effect on the industry and on employment prospects. The Minister knows of the advance warnings from the industry, yet he has ignored them.
I wish to refer briefly to the health arguments, to which several hon. Members on both sides of the House have referred. I used to smoke up to 50 or 60 cigarettes a day. I have not smoked for the best part of 10 years. I strongly recommend it to other hon. Members, but there must always be an important element of personal responsibility and freedom of choice in health education. It is no use Tory Members paying lip service to freedom of choice in some aspects while they throw that out of the window in relation to health education. Many other factors have a detrimental effect on personal health—not only smoking too many cigarettes but, for example, too much drink, too much food, and too little exercise. I have never heard anybody argue that we should be so totalitarian in health education that we should have compulsory teetotalism, statutory diets or enforced early morning marches to make the general population healthier. I am all in favour of discipline, but surely it should be self-discipline, discipline from within.
The late Gerald Nabarro, a Tory Member of Parliament, was in the forefront of the compaign for health education and the link between tobacco smoking and ill health. He was instrumental in getting on to the statute book the legislation that enforces tobacco manufacturers to label their products "H. M. Govt. Health Warning: Smoking may damage your health". When we see the wrecking job that the Government have done on the National Health Service, it might be more appropriate to make it compulsory for Tory Members and their dwindling number of supporters to wear lapel signs—some of which I have seen worn by schoolchildren in my area—saying "Warning: H. M. Govt. will damage your health". The Government have done more than any Government in history to damage the personal health of the nation, the health of British industry and the health of the economy in general.
There is no justification for this petty, mean and vindictive measure. Increased duty on cigarettes and tobacco, bingo, off-course betting and gaming machines will discriminate against working-class people, their pastimes, their pleasures and their pursuits, or whatever little pleasure they have left. It is unjustifiable discrimination against those on lower incomes. It will discriminate against those who play bingo in working people's clubs or who play betting machines.
If I wanted to raise extra money to recoup the reduced increase in the duty on derv, I could think of 1,001 means of so doing instead of the measures that are before us—for example, by introducing a wealth tax, by increasing capital transfer tax and other taxes on capital, by introducing a tax on private yachts and some of the other pursuits of the idle rich and by introducing a tax on large landowners such as the chairman of the Tory Party, Lord Thorneycroft, the Vesteys of this world and all the others who are bleeding the country and contributing nothing towards its economic betterment. If they want to redistribute wealth by means of the tax system, there are far fairer ways of so doing than the measures that are before us.
Tonight's motions are further attempts by this mean and discredited Government to pick the pockets of the poor and to line the pockets of their rich friends. That is why I hope that as many right hon. and hon. Members as possible will vote against the motion.

Question put:

The House divided: Ayes 113, Noes 40.

Division No. 248]
[12.23


AYES


Alexander, Richard
Buck, Antony


Ancram, Michael
Butcher, John


Baker, Nicholas (N Dorset)
Cadbury, Jocelyn


Banks, Robert
Carlisle, John (Luton West)


Beaumont-Dark, Anthony
Carlisle, Kenneth (Lincoln)


Benyon, Thomas (A'don)
Clark, Hon A. (Plym'th, S'n)


Benyon, W. (Buckingham)
Clarke, Kenneth (Rushcliffe)


Berry, Hon Anthony
Clegg, Sir Walter


Bevan, David Gilroy
Colvin, Michael


Biggs-Davison, John
Cope, John


Blackburn, John
Cranborne, Viscount


Boscawen, Hon Robert
Dover, Denshore


Boyson, Dr Rhodes
Dunn, Robert (Dartford)


Braine, Sir Bernard
Dykes, Hugh


Bright, Graham
Fairgrieve, Russell


Brinton, Tim
Faith, Mrs Sheila


Brittan, Leon
Fell, Anthony


Brown, Michael(Brigg &amp; Sc'n)
Fenner, Mrs Peggy


Browne, John (Winchester)
Fletcher-Cooke, Sir Charles


Bruce-Gardyne, John
Fookes, Miss Janet






Gardiner, George (Reigate)
Page, Richard (SW Herts)


Garel-Jones, Tristan
Pattie, Geoffrey


Goodlad, Alastair
Rees, Peter (Dover and Deal)


Griffiths, E.(B'y St. Edm'ds)
Renton, Tim


Griffiths, Peter (Portsm'th N)
Roberts, M. (Cardiff NW)


Grist, Ian
Roberts, Wyn (Conway)


Hamilton, Hon A.
Sainsbury, Hon Timothy


Hannam, John
Shaw, Giles (Pudsey)


Hawkins, Paul
Silvester, Fred


Hawksley, Warren
Skeet, T. H. H.


Heddle, John
Speed, Keith


Henderson, Barry
Speller, Tony


Hogg, Hon Douglas (Gr'th'm)
Stainton, Keith


Howell, Rt Hon D. (G'ldfd)
Stanbrook, Ivor


Jopling, Rt Hon Michael
Steen, Anthony


Kershaw, Anthony
Stevens, Martin


Lang, Ian
Stradling Thomas, J.


Le Marchant, Spencer
Taylor, Teddy (S'end E)


Lloyd, Peter (Fareham)
Thomas, Rt Hon Peter


Lyell, Nicholas
Thompson, Donald


MacGregor, John
Thorne, Neil (Ilford South)


Major, John
Townend, John (Bridlington)


Marlow, Tony
Trippier, David


Maude, Rt Hon Sir Angus
Viggers, Peter


Mawby, Ray
Waddington, David


Maxwell-Hyslop, Robin
Wakeham, John


Mellor, David
Walker, B. (Perth)


Meyer, Sir Anthony
Waller, Gary


Miller, Hal (B'grove)
Watson, John


Mills, Iain (Meriden)
Wells, Bowen


Moate, Roger
Wheeler, John


Morgan, Geraint
Wickenden, Keith


Murphy, Christopher
Williams, D.(Montgomery)


Neale, Gerrard
Wolfson, Mark


Neubert, Michael



Onslow, Cranley
Tellers for the Ayes:


Osborn, John
Mr. Tony Newton and


Page, John (Harrow, West)
Mr. Peter Brooke.


Page, Rt Hon Sir G. (Crosby)





NOES


Alton, David
Cunningham, Dr J. (W'h'n)


Ashton, Joe
Dixon, Donald


Beith, A. J.
English, Michael


Booth, Rt Hon Albert
Foulkes, George


Campbell-Savours, Dale
Garrett, W. E. (Wallsend)


Canavan, Dennis
George, Bruce


Cocks, Rt Hon M. (B'stol S)
Golding, John


Cowans, Harry
Harrison, Rt Hon Walter


Craigen, J. M.
Haynes, Frank


Cryer, Bob
Howells, Geraint


Cunliffe, Lawrence
McDonald, Dr Oonagh





Martin, M(G'gow S'burn)
Steel, Rt Hon David


Mikardo, Ian
Straw, Jack


Mitchell, Austin (Grimsby)
Tinn, James


O'Neill, Martin
Wainwright, R.(Colne V)


Penhaiigon, David
Welsh, Michael


Powell, Raymond (Ogmore)
Winnick, David


Prescott, John
Woolmer, Kenneth


Sheldon, Rt Hon R.



Shore, Rt Hon Peter
Tellers for the Noes:


Skinner, Dennis
Mr. George Morton and


Spearing, Nigel
Mr. Allen MacKay.

Question accordingly agreed to.

Resolved,
That as respects any time after 7 July 1981 the Resolution of the House (Tobacco products) of 16 March shall have effect with the substitution for £18·04, £34·29, £29·56 and £21·92 of £19·03, £35·91, £30·96 and £22·96 respectively.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

Mr. Campbell-Savours: On a point of order, Mr. Deputy Speaker. Apart from leaving the Chamber for about 15 minutes, I was here throughout the tobacco duty debate, willingly and without complaint, hoping to speak on an important issue.
The Government Chief Whip is a Cumbrian Member of Parliament and knows that unemployment in our county is particularly high. A factory in my constituency is directly affected by measures in the Budget. Another factory in the Northern region in the constituency of a Deputy Speaker—Rothman's at Spennymoor—is also affected, and I wished, too, to raise that issue.
My point of order is this. Is it in order for the Chief Whip to come into the Chamber and curtail debate when he knew that other hon. Members, particularly hon. Members in his own part of the country, intended to raise matters of direct concern and interest to their constituents? As a result of the curtailment of the debate, the case of a factory in my constituency has not been heard. I take exception to that.

Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. That is not a point of order. It is a matter for the Government, not for the Chair.

WAYS AND MEANS

General Betting Duty

The Chief Secretary to the Treasury (Mr. Leon Brittan): I beg to move,
That the general betting duty chargeable under section 1 of the Betting and Gaming Duties Act 1972 or section 16 of the Miscellaneous Transferred Excise Duties Act (Northern Ireland) 1972 in respect of any bet made on or after 12th July 1981 which is not an on-course bet within the meaning of the section in question shall be of an amount equal to 8 per cent. of the amount staked.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
My right hon. and learned Friend the Chancellor of the Exchequer has proposed three changes in betting and gaming duties. These duties were unchanged in the Budget. Taking account of the representations that we had received from hon. Members and elsewhere, I believe it is right that that area should now make an additional contribution in the context of the recoupment that is under discussion tonight. The general arguments in relation to that are those which I rehearsed in the previous debate.
The first specific measure with regard to betting and gaming is the proposed increase in the off-course rates of general betting duty from 7½ per cent. to 8 per cent. with effect from next Sunday, 12 July.

Mr. Michael Cocks: Disgraceful.

Mr. Brittan: The rate of 7½ per cent. has remained unchanged since March 1974. At a time when many sections of the community are being asked to make sacrifices, I think that it is reasonable to seek an additional ½ per cent. from this source. There will be no change in the on-course rate of 4 per cent. There is, of course, a substantial difference between the two.
I am well aware of the concern that has been expressed about illegal betting. This is particularly reflected in the report of the Royal Commission on gambling. The Royal Commission said that the existing rate of 7½ per cent. was running dangerously close to the critical point at which illegal betting would be likely to increase to a substantial extent. It did not say that any increase would result in a large-scale increase in illegal betting—

Mr. John Golding: rose—

Mr. Brittan: —but that 7½ per cent. was close to the critical level.

Mr. Cocks: Give way.

Mr. Golding: Rather than relying on the remarks of the Royal Commission, has the Chief Secretary made an estimate of the amount of illegal betting taking place in factories and pubs even with the present level of tax?

Mr. Brittan: I am unable to give that estimate.

Mr. Cocks: Disgraceful.

Mr. Brittan: I am afraid that the right hon. Member for Bristol, South (Mr. Cocks), the Opposition Chief Whip, seems a trifle unwell.

Mr. Cocks: I am perfectly well.

Mr. Brittan: If the right hon. Gentleman is well, he seems unaware of the rules of order. I find it surprising that one so senior in the House should be in that unfortunate position.

Mr. Austin Mitchell: rose—

Mr. Brittan: No, I shall not give way. I was about to bring my remarks to a conclusion.

Mr. Mitchell: rose—

Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. If the Minister is not giving way, the hon. Gentlman knows that he should resume his seat.

Mr. Brittan: I believe that it is precisely because of the risk of driving betting into illegal channels that my right hon. and learned Friend has confined the increase to so small a figure as ½ per cent. I commend the motion on that basis, as a measure contributing a small amount to the revenue required to recoup what was lost.

Mr. Robin F. Cook: This motion is the second example of fine tuning to be put before the House tonight. We are yet to debate another two, in the course of what promises to be an extensive survey of the Government's attempt to recoup the revenue that they lost as a result of their defeat on derv.
The Chief Secretary said that the motion arose from the same general considerations as he rehearsed when he moved the first motion. I listened carefully to what he said then. He had considerable fun at the Opposition's expense, on the basis of what happened when Labour was last in power, saying that we had constantly had mini-Budgets, which were our version of fine tuning.
I was not a member of the Treasury team that brought in those mini-Budgets, but I recall what happened. I do not remember any attempt by the Labour Government to introduce fine tuning of this nature to increase the tax burden in the way that we are discussing, by means of an answer to an oral question. If we are now to expect that it is legitimate for the Treasury Bench during any Question Time to announce four new tax increases, we shall look forward to Question Time with trepidation. It may be that at every Question Time we shall have a new tax. The next turn for Treasury Questions is 30 July—

Mr. D. N. Campbell-Savours: The next Budget day.

Mr. Cook: It may be as well, for the country as well as for the House, that there is a possibility that we shall not be sitting then, because heaven knows what additional fine tuning the Treasury would find it necessary to place before the House.

Mr. Frank Hooley: It may even be necessary before oral questions to the Chancellor of the Exchequer to suspend action on the Stock Exchange and shut the banks as a precaution.

Mr. Cook: It would be a novel procedure if we were obliged to keep Question Time going until 5 pm before additional questions were selected so that we could find out what new tax or tax increase was being announced.
The previous motion at least represented a sizeable sum of money—about £65 million, by far the greater part of the £85 million that we shall debate tonight. The Chief Secretary was modest enough to say that the sum that we


are now debating was small. Indeed, it is. The House will now have to debate, over three successive motions, a grand total of a mere £20 million, which, we are told, it is essential for the Treasury to recoup so that it may preserve the integrity of its fiscal judgment. The sum of £20 million, set against a public sector borrowing requirement of £10½ billion, is not fine tuning. We are no longer talking about fine tuning; we are talking about finessing the PSBR.

Mr. Michael English: Is not this an extraordinary contrast with the way in which the whole of Government expenditure, the best part of £100 billion, is not discussed at all by the House?

Mr. Cook: My hon. Friend touches on a grievance that the House has, and one that it should debate more fully. My hon. Friend and his colleagues on the Select Committee on the Treasury and Civil Service have tried to open up this area, and we appreciate their efforts on our behalf. I understand why my hon. Friend was unable to join us earlier. His work in the Committee may have been of greater service to the country than the mere £85 million that the House has been asked to debate on Government motions. It might have been better use of the House if the Government had tabled down here some of the matters that have been discussed in Committee upstairs, so that we could all have a say. However, my hon. Friend tempts me to go wide of the motion, and I shall resist that temptation.
I return to the general remarks that I was making before coming to the betting motion. It should be made clear, because it will help to shape the way in which I hope the debate proceeds, that we do not accept that it is necessary for the Government to recoup however much of the £20 million comes within the motion in order to reduce the public sector borrowing requirement. It is the Opposition's firm view that the PSBR, even without the £20 million being sought in these motions, is already far too low.
The view has been expressed from the Treasury Bench that the reduction in the PSBR which the Government are planning for this year is not deflationary because it is above the target which they set for last year. It may be higher than their target for last year. It is well below the outcome that they achieved last year.
I know that the Treasury Bench now treats demand management with contempt. There is no heresy reviled more than any Keynesian suggestion that it is possible to try to stimulate demand in the economy and achieve a return to growth. They treat any such suggestion with contempt. However, it must be pointed out that we are experiencing a recession which is without parallel in our history as an industrial nation. Output has fallen faster over the past two years than in any previous two years for which records exist, including the worst two years in the 1930s. To meet that collapse of output and that dramatic recession with a further reduction in demand is perversity of a high order. Yet the House is being asked to connive in that these motions will reduce demand further, deepen the recession and reduce any incentive to industrialists to try to return to growth and to increase output.
I was perhaps more fortunate than most other hon. Members in that on Sunday I received a copy of The Observer. It may be that I am the only hon. Member present who did. I understand that no one south of Newcastle clapped eyes on it. That is an unfortunate omission which I should like to repair, because in the

business review was Mr. William Keegan's column. I should like to share with the House the opening paragraph, because I am aware that it is a paragraph that most of my hon. Friends did not have an opportunity to read. Therefore, I brought it purposely with me south of Newcastle in order that I might share it with the House.

Mr. Golding: I wonder whether my hon. Friend will tell the House to which Newcastle he is referring.

Mr. Deputy Speaker: That is not really relevant lo the debate.

Mr. Golding: Additionally, I wonder whether my hon. Friend read the racing column in The Observer. I missed it, and I should appreciate it if my hon. Friend read it to us tonight.

Mr. Cook: I apologise if I have offended my hon. Friend's constituency sensibilities. Like many another Scot, I understand the geography of England from the stations which I encounter on my way south, and the station which I see on my way south is called Newcastle, although strictly it should be called Newcastle upon Tyne. I regret to tell my hon. Friend that I did not read the racing column. Had I done so, I am not sure that I could recall its contents verbatim from memory. But I give my hon. Friend the assurance which I have already given the Library, having made an inquiry on The Observer earlier tonight, that the next time there is a dispute on The Observer and copies only get north of Newcastle upon Tyne, I shall make sure that I bring two copies south, one for the Library and one for my hon. Friend so that he can read the racing column.
I return to Mr. William Keegan's column. It begins with the opening paragraph:
The Chancellor's micro-Budget"—
I appreciate the nuance there; one would not wish to suggest that the Treasury had brought in a mini-Budget—
of another £85 million in taxes bears out the growing impression that the Government's economic policy measures are beginning to resemble a scramble for deck chairs on the `Titanic'.

Mr. Ian Mikardo: I like it. Read it again.

Mr. Cook: I assure my hon. Friend that there is a better bit coming:
The mere fact that tax increases can be announced at all at this juncture and with such desperate meticulousness heightens the need for the Cabinet to take a long, cool look at where it is going, if only for the sake of their memoirs.
That was the view of Mr. William Keegan on Sunday. It is one which I appreciate Treasury Ministers were unble to share, not having seen The Observer on Sunday, but it is a view that they should take to heart, especially Mr. Keegan's sage advice to them that now is the time when they should perhaps consider what they will say in their memoirs when inevitably the question arises, if not from their grandchildren at least from their publishers, "What did you do in the great recession of the early 1980s?" That is the question which on present form Treasury Ministers will be hard put to answer.
I suggest that one of the actions that Treasury Ministers could take in order better to answer the question when their publishers ask it and when the typist looks with disdain at what she has been asked to transcribe is to say that they did at least attempt to maintain a PSBR in constant terms and did not further reduce the demand in the ecomomy.
We are asked further to reduce that PSBR by granting the Treasury the right to raise additional funds. Even if one


accepts that the fiscal judgment was right, Treasury Ministers know that there is a margin of error in estimating the PSBR. If the Government accept that fiscal judgment, which the right hon. and learned Gentleman mentioned, there is a margin of error in estimating the public sector borrowing requirement. They must know that there is a margin of error in the PSBR. Last year they got it wrong by 60 per cent. That is a large margin of error. Since that occasion, the wrath of the Government has been visited upon the Government's statistical staff and large numbers of members of the Government's statistical service are facing the axe and a redistribution to other services.
No other Department in the Government service would tolerate a 60 per cent. margin of error from its statisticians, but that is what we had last year in the PSBR. Not only did we did have a 60 per cent. margin of error but tonight we are being asked to debate three motions which—it is right that we are asked to examine them individually in detail—if taken together would add up to £20 million. That represents 0·2 per cent. of the PSBR. It is within one three-hundredth of the margin of error in last years' PSBR. It is bizarre to assure the House that it is necessary for the economic, monetary, borrowing—

Mr. Mikardo: The figure is one three-thousandth.

Mr. Cook: I stand instantly corrected by my hon. Friend. While I am still on my feet, I should not wish to repeat the calculation that my hon. Friend has been able to do from a sedentary position. I shall test it as soon as I sit down. I suspect that I am correct, but I shall accept my hon. Friend's correction for the time being. It is bizarre, whether it be one three-hundredth or one three-thousandth, that the House should be asked to accept these resolutions as being essential to the Government's economic policy, monetary target and borrowing requirements. Indeed, it is such a tiny sum in relation to the total PSBR that it is within what even this Government could recoup within a few working days—if they had the wit to find the means of increasing output by a mere 1 per cent.
Yet what are we debating, far from changing anything that would make it more likely that we shall increase that output, is well known to the Opposition to make it less likely that we shall achieve that increase, because we shall decrease the demand available to stimulate increased output.

Mr. Hooley: The calculation is even more ludicrous, because the correct calculation is the proportion that the £20 million represents to the aggregate of revenue which the Government hope to raise during the year. That is a more lunatic percentage that the one my hon. Friend gave.

Mr. Cook: I entirely accept my hon. Friend's point. He will appreciate that I enter the debate in the spirit in which the Government have brought the motion forward. Their anxiety is the effect of the PSBR on their monetary target. Therefore, they are seeking to persuade the House that it is essential to have this motion because of the proportion of the £20 million that it will give them in added revenue to enable them to contain a PSBR of £10½ billion.
That proposition is difficult enough to accept without accepting my hon. Friend's point that, viewed against total Government revenue, one would have great difficulty even in identifying the £20 million.
However, for the sake of argument and in order to make progress, let us concede the two arguments advanced by Treasury Ministers. Let us concede that their fiscal judgment is right. I hasten to add that this is a purely hypothetical assumption. Let us also concede that there is no margin of error in estimating the PSBR. It was 60 per cent. last year, but it is zero this year. Let us therefore assume that it is necessary to recoup the £20 million sought in these motions on betting and gaming.
How should the Government go about recouping that money? If in the context of the Finance Bill it is necessary to recoup expenditure which the Government have been obliged to concede by an amendment to the Bill as first presented to the House, it would surely be logical to expect them to look for a means of recouping that expenditure by amendments to other provisions in the Bill.
The Government could have looked at the concessions. After all, the Government have been obliged to make a concession to a certain lobby interest. We understand that, and we support that concession. But, if it is essential to finance that fresh concession, the logical thing is to revoke some of the concessions which the Government felt able to make when the Bill was first presented to the House.
I had difficulty in following the figures quoted by the Chief Secretary in the last debate. I have the Red Book with me, and I am looking at table 2. There I find concessions, the quantities of which are interesting. For instance, there is the concession on capital gains tax—
Settled property rules, including rollover relief".
The forecast for a full year is £15 million forgone—as much as the Treasury could hope to recoup by bringing in the motion that we are now debating.
There are alternative concessions contained under the heading of "Capital transfer tax". There are a large number of those concessions. My hon. Friends who did not serve on the Standing Committee may be interested to know that there are 10 clauses on capital transfer tax in the Finance Bill, which contain substantial concessions on top of the concessions made in last year's Finance Act.
That Act doubled the exempt amount of wealth that can be transferred without a person becoming liable to capital transfer tax. Indeed, the Treasury estimates—it is an estimate of which it is proud, because it attempts to carry out one of the Government's manifesto commitments—that. by doubling that exempt rate, two-thirds of households previously liable to the tax are removed from liability.
As we said in Committee, we only wish that the Government had made the same progress on implementing their manifesto commitment to cut income tax at all levels. That was last year. This year, having already removed from the capital transfer tax net two-thirds of those liable to pay it, they have reduced the burden to be paid by the remaining one-third. If we add up the figures given in the second column of table 2 relating to a full year's effect, we find that in a full year £20 million is given by the various concessions on capital transfer tax in the Finance Bill.
Therefore, if it were so essential for the Government to recoup the money that they lost by the cut in the tax on derv, the logical place to look for recouping that money would be within the Finance Bill, in the concessions that they felt able to make when they drafted it, and having first added up the revenue and expenditure and come to the conclusion that £10½ billion was the right sum for the PSBR for the forthcoming year. When that figure was


disturbed by the cut in the tax on derv, the logical way to replace it was to look at those concessions. The Government have not done that, although the two figures taken together would give them £35 million in a full year, which must be comparable in a full year to the revenue from the three motions. We can only speculate as to why they chose not to do it in that way.

Mr. Campbell-Savours: Is my hon. Friend aware—as we all will be—that every Labour member of the Committee, both tonight and during nearly every debate in Committee, referred to the concessions on capital transfer tax? Is he further aware that at every stage during the proceedings on the Bill there have been people from the press, representatives of the media, present—as there are tonight representatives from the Press Association—in the Gallery listening to the debate? Yet at no point during the proceedings on the Finance Bill, or in the debate on the Budget, has any copy gone out of Parliament about these major concessions. Will my hon. Friend once again tonight appeal to the media to tell the truth and to tell the British people what we are being asked to do in Parliament, much to our displeasure and in such a way that people do not realise what is happening?

Mr. Cook: If I were to choose this moment to make an appeal to the media, the particular representative who is present might feel that there was a degree of unfair and unfortunate victimisation. But my hon. Friend is absolutely right. There has been very little reporting of what has been done in regard to the capital transfer tax concessions in the Bill. If it were widely known in the country that the same Government who have assured both public and Parliament that they cannot afford a penny to lessen income tax, and who need to increase even the duty on matches to get the money that they require, are still able to find the money to provide a cut in tax for those able to transfer £2 million to their sons or daughters, it would be greeted with outrage. [Interruption.] I see no one seeking to intervene, but it is characteristic that on this point Memebers on the Government Benches are unwilling to join battle with us. We have discovered that on many occasions during the proceedings on the Finance Bill.
For reasons about which we can only speculate, the Treasury Bench has chosen not to revoke those concessions, which logically it now cannot afford. It has chosen to bring in taxes on other items and to seek to recoup the money in other ways. In the motion, the Government are seeking to recoup the revenue by putting up the general betting levy.
I confess that I labour under a disadvantage. It is a disadvantage that is not shared by my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding), who will he able to advise us on the motion from first-hand information. But I have no first-hand knowledge of the betting world. Indeed, if I may share a confession with the House, the only occasion on which I have been in betting shops was in 1964, during the general election, when I was active as a sub-agent and was invited round Edinburgh to put up Labour posters in the betting shops of one of our local betting chains. The owner was encouraging his staff and punters to vote Labour in the unfortunately mistaken belief that a Labour Government would repeal the Betting, Gaming and Lotteries Act 1963 and make his operations illegal again, because he had made far more money when he was illegal than when he became legal under a Tory

Government. That is my first-hand experience of what occurs inside a betting shop. I have to rely on book learning to assess the impact of this motion, and the money it seeks, on the people we represent.
It would be a safe generalisation to say that betting and bingo are predominantly a recreation of the working class. I have the Home Office gambling statistics for Great Britain covering the period from 1968 to 1978.

Mr. Golding: It would be safer for my hon. Friend to refer to off-course betting as being predominantly the activity of the working class. If he uses that term, he will not offend my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) and myself, who wish to talk about on-course betting.

Mr. Cook: I have no wish to offend my hon. Friends. I agree that there is a distinction between on-course and off-course betting.
The gambling statistics contain a number of interesting tables. One table relates the incidence of bingo and betting or pools to different socio-economic groups. The peak for both is reached among the manual worker groups. The peak for bingo occurs among the unskilled manual class. The peak for betting and pools occurs in the skilled manual class, closely followed by the semi-skilled manual, closely followed again by the unskilled manual class. There is clearly a peak distribution in the manual, working-class socio-economic groups.

Mr. Hooley: I am trying to follow my hon. Friend's argument. Is he talking about aggregate or per capita amounts staked? There is clearly a considerable difference, which will have a bearing on his argument. My hon. Friend says that betting is the prerogative of the working class. There are, of course, extremely rich individuals who indulge in the casinos of this metropolis that are one of the disgraces of London.

Mr. Cook: I ask my hon. Friend to be patient. I shall refer to the matter. The casinos do not feature in the figures to which I have drawn attention.

Mr. Mikardo: Nor does the Stock Exchange, the biggest betting shop in Britain.

Mr. Cook: My hon. Friend is right to distinguish between the practice of betting and the sums laid. If one took a distribution on the basis of the amount of bets laid, the distribution would doubtless be different. The figures to which I refer relate to the percentage engaging in each activity in the four weeks prior to interview. We may be talking about a sum of 50p. The figures may conceal wagers of £5,000 placed by the 1 per cent. of professionals who went to bingo some time in the previous four weeks. However, the peak distribution—the highest incidence of those betting or going to bingo—occurs among the manual working class.
A similar picture emerges in the table relating to household income. The peak distribution in the case of bingo, betting and pools occurs among those earning between £60 and £100 a week in 1977. That is not a high income, even for 1977. It is within the sum which could comfortably be attained by skilled manual, working-class individuals. About £60 could comfortably be attained by unskilled manual, working-class individuals. The peak participation in betting at bingo is to be found in male, manual, working-class families.

Mr. Hooley: Bingo is different.

Mr. Cook: Bingo is treated differently from betting in the tables that I am using. In both bingo and betting the distribution is similar.

Mr. Golding: Betting in betting shops primarily is a male working-class activity, but bingo is primarily a female working-class activity. That has important social repercussions.

Mr. Cook: I am obliged to my hon. Friend.

Mr. Hooley: My hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) has made my point. Females are involved in bingo more than males.

Mr. English: I do not want my hon. Friend to use up his speech on the next motion, which deals with bingo.

Mr. Cook: I have plenty to say about the betting levy. My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) has much to say about bingo. There will be no composite speech but two separate speeches. My hon. Friend the Member for Nottingham, West (Mr. English) will certainly get value for money this evening.
I hope that we have unravelled the statistics so that we may be satisfied that the highest incidence of participation in betting involves male workers in off-course shops. We can take that as common ground among all those who have participated in making this interesting speech. If it were necessary for the Government to recoup their revenue through the betting and gaming duties, why did they not put before the House a motion on the duty levied on casinos?
There are four betting and gaming taxes. The first is the general betting levy, which we are debating. The second is the bingo duty, which we shall debate later. The third is the duty on pools, which the Government could not, with a straight face, seek to increase because they have already been criticised by the Rothschild commission, which suggests that the duty on pools should be reduced. It would be beyond the brass neck of the Treasury to go against that and seek an increase in the duty. The fourth is the duty on gaming licences. I am advised by those who have been in casinos that it is not normal to find a predominance of unskilled punters, such as one would find in an off-course betting shop. Nor is it normal to find a predominance of widowed pensioners, such as one might find in a bingo hall.

Mr. Golding: I should place it on record that I do not frequent casinos either. My betting activities are conducted with the male manual working class of whom my hon. Friend has spoken. I plead total ignorance of the affairs to which my hon. Friend is addressing himself.

Mr. Cook: I am grateful that we have clarified that point.

Mr. Hooley: Will my hon. Friend give way?

Mr. Cook: If my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) wishes to confess personal failings, I am happy to give way.

Mr. Hooley: I do not intend to make any confession. My hon. Friend is guilty of a slip of the tongue. Casinos are full of unskilled punters. Nobody but an unskilled idiot would go into a casino. I think that my hon. Friend meant to say that casinos are not full of unskilled manual worker punters.

Mr. Cook: Perhaps my hon. Friend and I could compromise and agree that casinos are full of the idle wealthy. However, it is a wise man who knows when he is beaten; and I shall pass rapidly to my next point.
Given my state of first-hand, personal ignorance about what goes on in casinos, I may have erred. I am open to correction from any part of the House, but I gain some conviction in my prejudice from the reports of the Betting and Gaming Board. For two successive years the board's report has confessed that the reduction in revenue in casinos is a reflection of the reduction in the number of wealthy visitors coming to London, in particular, and Britain, in general, on tourist holidays.
The House could reasonably ask why we are faced with a motion which will increase the tax paid by the unskilled manual punter and a subsequent motion that will increase the duty paid by the widowed pensioner who goes to bingo but have not been offered a motion to increase the gaming duty paid by wealthy American or Arab visitors who come to London on the spree. It would seem that those are precisely the people to whom we might look to recoup some of the revenue—if it is essential that we recoup it.
The motion will raise to a duty of 8 per cent. the tax paid by every unskilled manual punter every time he places a bet. Every £1 bet will attract tax of 8p, which will go to the Treasury. I am advised that things are very different in casinos. I am told that the wagers placed in casinos—the money handed over for chips—are known as the drop. The value of the duty levied on gaming licences is equivalent of 0·13 per cent. of the drop. My hon. Friends the Members for Heeley and for Bethnal Green and Bow (Mr. Mikardo), who are quick with arithmetic, will soon apprehend that 8 per cent. is 58 times 0·13 per cent.

Mr. Golding: My arithmetic is poor, which is why I am twisted so often in the settling of debts. Does my hon. Friend appreciate that the punter in the betting shop pays the levy as well as the tax and that bookmakers cane him even further for so-called administration?

Mr. Cook: I am grateful to my hon. Friend for that additional dimension to what I was saying. I had not wished to give a picture that unduly exaggerated the contrasts that I wish to establish. I was confining myself to the 8 per cent. referred to in the motion. Even if we confine our focus to that 8 per cent., we are left with the contrast of the unskilled manual punter who is paying 58 times the duty paid by the wealthy Arab who visits a London casino. That contrast attracted the attention of the Royal Commission—

Mr. English: I am grateful to my hon. Friend for giving way. He has allowed many interventions. There is an analogy to be drawn. The Government increased the public sector borrowing requirement for 1981 over 1980 by 59 times the amount of the increase in taxation provided for by the orders collectively.

Mr. Cook: I am impressed by my hon. Friend's capacity for finding a coincidental figure that is parallel to the figures in the motion. As he said, I have given way generously. Perhaps I should make progress with the points that I wish to adduce to the House which relate to the reasons why we should resist the motion. The Rothschild Royal Commission on gambling included an interesting section on the revenue from casinos. On page


305 it said that there should be an increase in the duty on those who frequent casinos to bring them in line with the duty paid by those who frequent off-course betting shops. It said:
the argument being that it is illogical, if not inequitable, that someone who gambles in a casino should pay virtually no tax whereas the punter who backs a horse off-course is taxed at 7·5 per cent. of his stake".
That sentence, cogent, lucid and persuasive though it is, will, if the motion is carried by the House, be out of date. That 7·5 per cent. will become 8 per cent. The contrast will be even greater.
I appreciate that in the last Finance Bill the Government implemented another part of the recommendations of the Royal Commission, namely, an increase in the levy on the profits of the casinos. However, they did nothing to increase the rate which the Royal Commission recommended for the actual chips purchased by those who frequent the casinos. That is not an academic point. The Royal Commission went to the trouble of identifying the consequences of its proposals on revenue. It might interest the House to know what the Royal Commission thought could be obtained in additional revenue. It said:
If these proposals were implemented, casino tax receipts would go up from £5·5 million in calendar 1977 to an estimated"—
I appreciate that the figure may come as a surprise; it was quoted by the Royal Commission after considerable analysis—
£54.4 million".
That is a 10-fold increase at 1977 prices. If we uprate that figure to 1981 prices, we shall find almost the full figure of £85 million that we are being asked for tonight.
Last year, when the Government implemented part of the recommendations, they estimated that that would yield £20 million in a full year. That leaves at least another £35 million of additional revenue which they could obtain by translating into the Finance Bill the recommendations of the Royal Commission, which would fall overwhelmingly on that wealthier section of the population who visit casinos.
That has not happened. Instead, we have this motion which increases the duty on those who indulge in betting on horses and thereby will not diminish but increase the contrast in the rate of duty on the male manual workers who go to the betting shop and the wealthy idle rich who go to the casino.
A yet further divide is opened up between the rate of duty that is paid by those who have a lifestyle and employment that are sufficiently relaxed to enable them to take the day off to go to Ascot or to the Derby and the rate that is paid by those who do not have the lifestyle that enables others to travel perhaps several hundred miles to the course and who are obliged to place their bets in the corner betting shop off course.
In the origin of the levy on general betting a contrast was introduced between the two rates. The rate introduced for on-course duty was 4 per cent. The rate introduced for off-course betting was 6 per cent. The on-course betting was two-thirds of the rate for off-course betting. The off-course betting duty has been raised from 6 per cent. to 8 per cent. and the on-course duty now represents not two-thirds of the off-course duty but half that duty.
It will be within the recollection of many hon. Members that off-course betting was discouraged because it was believed that if it were tolerated and encouraged it would be indulged in by the unskilled manual worker as a punter. It was feared that it would be indulged in by the poorer

section of the population. For that reason, it was thought that it should be discouraged. The implication within that discrimination was that it was the wealthier who resorted to on-course betting.

Mr. Golding: I approve entirely of my hon. Friend's argument about casino betting, but he is now going wide of the mark. Does he not appreciate that the tax is lower on course because of the need to have a strong market to establish starting prices? There is every reason to attract the public to attend racecourses. My hon. Friend's argument is not strictly accurate.

Mr. Cook: My hon. Friend is tempting me into deep water where I am not competent to canter. I shall not be tempted by my hon. Friend to take up that line of reasoning. There will be many who participate in the debate who have more knowledge of these matters than myself. I understand that not every participant will agree with my hon. Friend. I respect the reason that he has introduced for the differential, and I think that he will agree that the differential is widened by the motion. By and large, the wealthier section of the community who back horses will not normally be found in the street corner betting shop. Conversely, many of those who bet in the corner shop will never be able to attend racecourses in the course of their working lives to place an on-course bet. It is a matter of concern that there should now be a differential between the two categories that is equivalent to 100 per cent. of the on-course duty.
I felt that it was necessary to examine the motion in some depth. It poses a number of issues that I know some of my hon. Friends wish to elaborate. I shall reiterate briefly the arguments that I have adduced. We believe that it is perverse to ask the House to accept a motion that will increase revenue and thereby diminish the Government's PSBR. However, if the Government are fixated by the need to maintain a total of £10½ billion, they can withdraw the concessions that they have offered to the wealthy.
If they spurn that offer, if they reject that option and if they are convinced that it is necessary to recoup lost revenue from betting and gaming, they should at least recoup the money by applying increases in the betting and gaming tax more equally to all sections of the population. At the very least they should involve those who frequent casinos in equal sacrifices to those that will be made by those who do not. The Government have not chosen to do that. They have asked the House to assist them in reducing their borrowing requirement to defend their concessions to the wealthy and to recoup the revenue in a way which will bear hardest on the lower income groups rather than the higher income groups. For that, the Treasury Bench deserves the contempt of the House.

Mr. John Golding: The speech of my hon. Friend the Member for Edinburgh, Central (Mr. Cook) was erudite. If I do not follow him in discussing the PBSR--[Hon. Members: "PSBR".] I stand corrected. It is not a subject which is discussed often in the betting shops which I frequent. It was educative to listen to my hon. Friends on the Front Bench.
I was bitterly disappointed at not being able to speak in the debate on tobacco tax. My right hon. Friend the Member for Wakefield (Mr. Harrison), who intimidated me, made certain that I did not make the contribution in


that debate which I would have wished. It was not the Opposition Chief Whip who wanted the debate curtailed. I know his great interest in these matters. He is a Bristol Member and I would have been staggered had he wanted to curtail the attack on the Treasury Bench for inflicting further hardship on Bristol and one of its staple industries.
It was a bitter blow when I heard the package of further taxes announced last week, because I thought once again that the puritan faction in Parliament had won the day. I was surprised when I heard the defence of those supporting the Government. I do not believe the argument that those taxes have to be introduced because of the concession on derv. I agree thoroughly with the concession on derv.

Mr. Austin Mitchell: I believe that my Friend is confusing attitudes. While there is a puritanical attitude inside and outside the House which would lead people to demand more taxes on gambling, drinking or whatever our favourite activities might be, this is not a question of puritanism. It is simply a question of sheer, simpleminded, wrong-headed obstinacy in persevering with unattainable objectives by wrong-headed policies. When someone is forced to make one slight change, he tries to get back at the people who made him make that change in the most obstinate and unforgiving fashion. It is a question of obstinacy, not of morality.

Mr. Golding: The puritans were obstinate and unforgiving. It is part of their quality to be both obstinate and unforgiving. The reason why there are so few Conservative Members present for these important motions and why the contributions from the Opposition Benches have been so forceful is that these measures have been introduced by sour-faced, killjoy politicians on the Treasury Bench, while trying to initimidate their hon. Friends who forced on them a humiliating defeat on derv. I wish that they had been as successful with the tax on petrol. The price of petrol is far too high.
The Government were right to make the concession on derv. I represent an agricultural constituency, and the concession was important. They were wrong to impose the crippling burden in the first place.
It is not a question of a choice of tax on derv, betting, cigarettes, bingo or one-armed bandits. As many of my hon. Friends have made clear, the Government could have chosen not to give tax concessions to the rich when they came to office. They gave an advantage to the very rich with the changes in capital transfer tax. The choice is not between a tax on derv or on what the Royal Commission describes as amusements. It is between taxes that will hit working people hard and taxes that would not have hurt the rich to the same extent.
This is the first increase in off-course duty since 1974. Faced with financial stringency, the Labour Government did not increase the duty. Had there been good arguments for an increase, they would have snatched them. The duty was originally 2½ per cent. and was raised to 5 per cent. in 1968. In 1970, a differential was introduced between off-course bets, on which the rate was raised to 6 per cent., and on-course bets, which remained at 5 per cent. Bets by off-course bookmakers with bookmakers on the course were treated as on-course bets, and hedging bets by on-course bookmakers were exempted altogether. In 1972,

the on-course rate was reduced to 4 per cent. In 1974, the off-course rate was increased to 7½ per cent. Those are the rates in force at present.
My hon. Friend the Member for Edinburgh, Central made a point that my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) may argue against. I do not attack the Government for not increasing the on-course betting duty. I should have been upset had they done so. People who go to the course are not necessarily rich, and those who use betting shops are not necessarily the least wealthy. It is not as simple as that. I enjoy going to Haydock Park, Chester and Uttoxeter. I meet my constituents at Haydock and Chester. They are not rich. They are craftsmen, miners and potters. They are ordinary working men who enjoy a day at the races.
You, Mr. Deputy Speaker, will know that the song "Blaydon Races" is not the anthem of the rich or the song of the aristocracy. It is a working-class song. Going to the races is not just an aristocratic pastime. The racecourses of this country could not exist on that patronage. There is a good cross-section of the community at our racecourses. I talk racing to many of my constituents—shop stewards, conveners, ordinary working people and others who enjoy watching racing on the "box" on a Saturday but who equally enjoy going to a racecourse. It is a fallacy to say that working people do not go to the racecourse. They do. Indeed, I should like more of them to do so.
If there is a distinction between the well off and the not so well off, it is in the method of off-course betting. The better-off and the rich bet off course as well as on the course, but they bet on the "blower" by having an account. There are differences in the level of betting between those who have an account and those who do not, but let us not say that the difference between on-course and off-course betting is a class issue, because it is not.
The argument in favour of low on-course betting duty is this. No doubt my hon. Friend the Member for Bethnal Green and Bow will wish to take this up later. First, punters like to bet at starting price odds. The average working-class betting shop punter bets at starting price rather than at a price quoted on the board by the bookmaker.
That starting price is determined primarily by the on-course betting. That is the dominant influence. If there is a strong market at the course, there will be a fair price which cannot so easily be manipulated, although it is always possible for prices to be manipulated. If, it is argued, the punter knows that the rate of tax is that much lower on course, he will go to the course and bet there. That strengthens the market. I must say that I am not sure about the strength of that argument. I think that it needs close examination. Nevertheless, that is the argument.
There is another argument for a lower rate of duty on course, however. Betting shop betting, allied today with television and particularly the "ITV Seven", is entirely parasitic. It is totally dependent upon racing taking place on racecourses. If the revenue at the racecourses falls, conditions worsen. One of the arguments for a lower rate of duty at the racecourse is that it will attract people away from the betting shops and from watching the "ITV Seven" on television to the scene of the action. Therefore, there are good arguments for the on-course betting duty being as low as possible.
Those involved in racing will argue strongly that in this country the State and the bookies take so much out of racing that it is important to find a way to get money into


the sport itself. That means attracting people to attend race meetings. My hon. Friend is wrong to dismiss this country's racecourses as being purely for the rich and better-off.

Mr. Campbell-Savours: My hon. Friend led the House to believe that he would say why the Labour Government never sought to increase the levy above the rate in 1974. He may wish now to illuminate us on that subject.

Mr. Golding: I would not avoid that matter, but I felt under an obligation to educate my hon. Friend the Member for Edinburgh, Central. He will teach me economics, and I shall teach him the rudiments of gambling. One reason why the Labour Government would not increase the duty is the impact on working people, for many of whom the tax will be a further imposition. I intervened in my hon. Friend's speech to explain that when one bets in a betting shop one pays not only tax but the levy.
I look at my bet of last Saturday. I bet in 5p amounts. A "Heinz" bet is 57 bets in combination. At 5p a bet, that makes £2·85. I actually hand over £3·11. That figure is engraved on my heart; it is the most important in my life. I pay £2·85 for the bet, plus what I call the tax, but it is not a tax alone. There is the tax, on top of that the levy, and on top of that again an amount that the bookie takes for himself, squeezing a little extra out of the punter. One reason why a Labour Government would not have wished to increase the betting tax is that it would have had an impact on not only the punter but the levy.
When I read the newspapers the morning after the Chancellor's surreptitious announcement, I was disturbed to read that the bookies were thinking of making a deduction not of the present 9p, not of 9½p, which it would be if they added the ½p that the Government had put on, but of lop. The lop would be very damaging psychologically, and I am sure that the Government have not appreciated that.
The betting tax is an imposition on working people. I take the point that my hon. Friend the Member for Edinburgh, Central made about the casinos.

Mr. Jack Straw: Before my hon. Friend gets on to that, will he accept that a further reason for not increasing the off-course duty in this way is that illegal betting will be encouraged the greater the off-course duty is? Is he aware that for the past 10 weeks the staff of the betting duty control unit in Manchester have been on strike and that, as long as the Civil Service strike goes on, the chances of the Government collecting the duty even at the old rate, let alone at the new one, and properly enforcing the checking on the collection of this tax during the past 10 weeks will be very difficult?

Mr. Golding: When my hon. Friends ask me whether I am aware of illegal betting, it is like asking me whether I put on my trousers before leaving home in the morning. I must resist these "insulting" interventions and return to the education of my hon. Friends.
This increase in the betting tax must be taken with the increase in the bingo tax, the one-armed bandit tax, and the increase in the price of cigarettes following upon the increase in the price of a pint. All these have come together. In a previous debate, I asked my hon. Friend the Member for Grimsby (Mr. Mitchell) whether he realised the impact that all these would have on the pocket money

of working men and women, and he said that he did. This is important, because when working men and women are assessing how badly off they are they do not look at the papers to study the retail price index or the tax arid prices index. They make a rough and ready judgment of how far their money is likely to go.
On Friday, working people to whom I spoke in the clubs in Newcastle were very angry about the attack on them that this proposal constituted. They are very upset that working-class amusements and pleasures are being taxed but that others are left untaxed.
My hon. Friend the Member for Edinburgh, Central dealt admirably with the casinos—the big scene, Park Lane gambling, the gambling of the very rich. He could have gone beyond that. I do not think that he will find many hon. Members on the Conservative Benches who gamble in that way, though there are perhaps a few. He could have highlighted the gambling in middle-class homes in the playing of bridge. Many middle-class people gamble when they play bridge. If that is their forte, they play cards. That will be completely unscathed, as will many of the games of chance and other forms of gambling.

Mr. Cook: I cannot resist returning the compliment that my hon. Friend has paid me on so many occasions by correcting the grievous errors I was making as a novice in these matters on what sort of people indulge in betting on course and off course. It is my duty to advise my hon. Friend that I have a room in my constituency which has been the committee room for my party for the past 30 years. It has been financed entirely by the bridge sweeps that are held twice a week by people who are in no way middle-class, but working-class people indulging in a pastime that they find amenable which has drawn them to that hall twice a week for 30 years.

Mr. Golding: Things are always different in Scotland. One will not find many English political parties financed by bridge. The working-class people in Scotland play golf and fish with the fly. Things are different here, so different that perhaps—

Mr. Mikardo: So different that they sometimes do not put their trousers on.

Mr. Golding: I must be careful to refer to the conditions here in England. People find few English Labour Party headquarters supported by bridge clubs. I am sure that I shall be unchallenged in that remark by my hon. Friends around me.
I speak with trepidation on the subject of illegal belting because I have had a number of all-winning bets with my hon. Friend the Member for Bethnal Green and Bow. This being a Royal palace, it is exempt from the betting laws; and I have not paid any betting tax or levy or administration costs to the book. Illegal betting has been growing. Those who have knowledge of these things know, especially with small bets, that where there is a limit and the winnings are of no consequence, illegal betting has been on the increase. On factory floors there are illegal bookies who thrive. Outside I have been offered and piously refused bets without tax. All big factories can locate an individual on the shop floor with the status, although not the financial backing, of my hon. Friend the Member for Bethnal Green and Bow. One may find someone who is prepared to take the punter's money and settle at starting prices. Illegal betting has been growing—

Mr. Straw: I wonder whether my hon. Friend will finish before 2.30.

Mr. Golding: I protest at the fact that members of the Front Bench, who in my day had a sense of responsibility, are now taking bets on the time that I shall finish my speech. My right hon. Friend the Member for Wakefield is doing his best to maintain decorum on the Front Bench, but with these younger Members it is difficult.
It is not surprising that illegal betting has been on the increase. If one pays 7½ per cent. tax, 0·9 per cent. for the levy and 6 per cent. for the bookmakers' bunce, that money could have been used for an additional bet. If working-class punters did not pay tax, the levy and a bit extra to the bookie, they could use the money for an additional bet.
There are deterrents. The bet that I have is called the "Heinz", which is a combination bet. If it comes up, the bookie may owe a lot of money. Some people prefer to bet with the big combines because their limit is £100,000. However, if one bets with the unofficial, illegal bookie on the shop floor, generally the limits are very much lower. Even if one theoretically were to win £100,000 on a combination bet with an illegal bookie, he could not or would not pay out. In order to avoid dispute and acrimony, the illegal bookies place a limit on their pay-outs.

Mr. Dennis Canavan: My hon. Friend is referring to many of the abuses of the private enterprise system of bookmaking in Britain. Does he agree that the best way to protect the consumer would be to extend public ownership to betting? Should we not also make betting debts legal, because, as they are not even recognised in law at present, private entrepreneurs can treat the ordinary punter like rubbish and scrub the debts even when the punter wins? That is now the situation with betting, which is highly unsatisfactory. Only by increased public control, ownership and enterprise can we eradicate many of these abuses.

Mr. Golding: I shall be in difficulty if I follow that argument. I was dealing with illegal betting and its potential for growth. I am not talking about private enterprise and big companies. I am actually talking about workers' control and in some cases workers' cooperatives.

Mr. Deputy Speaker: Order. The motion relates to taxation, which allows for a pretty wide debate. I do not think that we ought to pursue that line of argument.

Mr. Golding: My hon. Friend led me astray. I apologise. I was determined not to be led astray, but it was the natural courtesy that we English owe to the Scots that led me along that path.

Mr. Mikardo: My hon. Friend cannot resist temptation.

Mr. Golding: I have never been able to resist temptation. If I were able to resist temptation, I would not be making this contribution because I would pass betting shops by, just as I would reject bingo tickets and leave the one-armed bandits alone.
Illegal betting is now a serious possibility, even though I absolutely support the levy board. However, the Government betting tax, the levy and the more than 1 per cent. that the bookies will get for nothing will take the deduction to 10 per cent. The psychological impact of that will be very great. It will drive many people away from

the betting shops and credit betting to illicit bets. There is the possibility that the Government will lose money. It is possible that by increasing the duty the revenue will fall because of the impact on the amount of betting and because it may increase the illegal betting.

Mr. Cook: May I refer my hon. Friend to page 26 of the Rothschild report? He is right to say that the Commission drew attention to the potential loss of revenue, but in paragraph 6.8 on page 26 the Commission makes the point which he has elaborated—that illegal betting could increase once the combined rates have exceeded a certain critical point. The evidence it received is that the present combined rate—that is, before the ½ per cent. increase that we are being asked to consider tonight—is running dangerously close to the point at which illegal betting would increase.
My hon. Friend is absolutely right to point to the risk that this could result in a fall in revenue to the Treasury, I am sure that he will place equal emphasis on the other point made in that paragraph, where the Royal Commission adds:
The consequences of over-taxing betting are not, as in the case of other duties, merely the loss of revenue … There are serious social evils which would follow from a return to the state of affairs which existed before 1960.
I am sure that my hon. Friend will agree with me that that is an additional point which, if anything, transcends the loss of revenue which could flow from putting up the combined rate to too high a level.

Mr. Golding: It is at this point that I must protest about the Rothschild Commission. It states that
The consequences of over-taxing betting are not, as in the case of other duties, merely a loss of revenue and a fall in demand for the taxed commodity. There are serious social evils which would follow from a return to the state of affairs which existed before 1960.
What were the social evils? That passage is an example of the puritanism that I attacked earlier.
When I was a kid I used to nip in and out of the illegal betting shops. I used to give people bets. I used to run with bets. I did not see the social evils that the Rothschild Commission talks about. It was not a desirable state of affairs. I can remember being caught at the age of 14 as I was going into a bookmaker's premises in Chester. When the copper pinched me I had to pretend that I was going to have my hair cut. That was not a desirable state of affairs, but what social evil is there in putting a shilling on a horse? What social evil is there in having a bet on a Saturday on ITV and in sitting and dreaming that a quarter of a million pounds will come one's way on that day?

Mr. Cook: It is important to the House to clarify this point. My hon. Friend will appreciate that again I cannot speak on this matter from first-hand knowledge, for before 1960, when the gaming legislation was introduced, I was of an age at which, if my father had caught me putting a shilling on a horse, I would have got two very flat ears straight away. I would, however, refer my hon. Friend to the Rothschild Commission. My hon. Friend wished to have pointed out to him the serious social evils of illegal betting. I ask him to comment on paragraph 6.2, on which I am not in a position to judge. The last sentence states: the law produced resentment and attempts to corrupt the police, contempt for authority and a bookmaking trade operating outside the law, prey to protection rackets and gang violence".
I am sure that my hon. Friend played no part in gang violence or protection rackets. However, the Rothschild


Commission was persuaded that, at some point in the past, these things obtained. I am sure that if they did obtain, my hon. Friend would agree that they constituted serious social evils.

Mr. Golding: I accept, from the point of view of the bookies, what my hon. Friend states. I do not believe, however, that there would be a return to the situation he has described if there was a mixture of off-course bookie shops together with illegal bookies in factories and offices. My father, too, would have been most upset if he had caught me betting or playing cards. Like you, Mr. Deputy Speaker, he was a good Nonconformist.
I have mentioned on a couple of occasions the impact on the levy. I am bitterly disappointed that many members of the racing group of the Commons are not present on the Conservative Benches. I have joined those hon. Members and others among my hon. Friends on many occasions to plead the cause of racing and to plead that its finances should be placed on a better footing. I was pleased also to work with those hon. Members and with the Liberals, who are also absent, to tighten up the law on the levy. They should be present. I should have thought it is apparent that the Government have taken more money out of racing by adding the ½ per cent. on to the tax and giving bookmakers the excuse to add another ½ per cent. to their deductions, making a total of 1 per cent. This will mean difficulties for the Horserace Betting Levy Board when it seeks to persuade the Home Secretary to increase the present levy.

Mr. Austin Mitchell: It is a happy conjunction of circumstances that my hon. Friend should be taking part in the debate and that I should have a surplus 50p in my pocket. My hon. Friend, together with my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo), may care to bet that none of the hon. Members to whom he has referred will attend this debate and also that none will vote against this iniquitous measure.

Mr. Mikardo: That is a racing certainty.

Mr. Golding: I am ashamed to hear the response of my hon. Friend the Member for Bethnal Green and Bow. It is always foolish to bet in a situation where the result can be altered by one's bet. I could accept the bet of 50p, ring up one of the hon. Members in the racing group and give him half the proceeds of the 50p to get him to vote against the Government tonight. It would be what Damon Runyon called "Daddy, I've got cider in my ear."

Mr. Austin Mitchell: My hon. Friend is doing a ministerial-type dodging act. Does he accept the bet or not?

Mr. Golding: It would be unprofessional to accept the bet in the presence of my hon. Friend the Member for Bethnal Green and Bow, who has that monopoly in the House of Commons. If I met my hon. Friend the Member for Grimsby on the factory floor, perhaps I could entertain his bet. However, the monopoly is firmly established on the Opposition Front Bench below the Gangway. I cannot take business from my hon. Friend. He obviously needs the money.
I have been diverted. Racing is financed from several sources. In Hong Kong the State does not tax bookmakers. In a haven of private enterprise there is total public ownership. The Tote has the monopoly. In this country

racing is financed directly from the proceeds of the Tote. In France and Australia it is also financed by the proceeds of gambling.

Mr. Canavan: I hope that my hon. Friend is not using Hong Kong as an example of how racing should be run. The Hong Kong jockey club has more power in Hong Kong than the British Government. Not long ago the Hong Kong Government gifted to the jockey club hundreds of acres of land which could have been used to house many homeless people in Hong Kong.

Mr. Deputy Speaker: Order. I hope that the hon. Gentleman will not go further astray.

Mr. Golding: The remark of my hon. Friend the Member for West Stirlingshire (Mr. Canavan) was irrelevant. I am sorry that I gave way, because I thought that he would make a serious remark about horseracing.
The horseracing industry believes that it is deprived of finance. I speak not from a brief from the industry but on behalf of myself and my constituents. If I were to speak from a brief from the industry, I should say that the Government already take too much money out of racing. I am sure that the Government have been, and will be, presented with comparisons of what they take out of racing and what is taken by, for example, the Government of the Republic of Ireland, where racing is allowed to flourish.
If I were speaking from a brief prepared by the industry I would say that racing in this country has suffered because prize money is too low and the cost of training is too high. Therefore, class horses are taken to be trained in France or Ireland. The industry would also say, and I endorse this argument, that, because of the lack of money in racing, courses are not as attractive as they might be and facilities are not as good as they should be.
The levy board has done a reasonable job in bringing about improvements on courses, but further substantial improvements are needed. Because the board is short of money, it has made proposals that would lead to the severe neglect of some courses. My hon. Friend the Member for Walsall, South (Mr. George) has spoken previously from a good brief on racecourses in the West Midlands, where some courses have been neglected because of the lack of finance, with the result that facilities for spectators are very poor. I have visited the course at Wolverhampton, which is one of those mentioned by my hon. Friend as needing additional finance.
When I first spoke in the House about horse racing, I had to tell John Temple, the then hon. Member for City of Chester, that, while he and his friends saw the races when they went to Chester, my friends often saw no more than the jockeys' caps as the horses swept past. Standards and facilities are inadequate on many courses. In this regard I was bitterly disappointed to learn that Chester racecourse may be neglected. It has more character than most other courses.
The neglect has come about because the Government have taken money out of racing but put none in. The only way in which finance is put into the sport is through the levy, and the high level of taxation has made it difficult to impose a high levy. As the Government increase taxes and the bookies increase their bunce, it becomes increasingly difficult to get more money into the levy.
I have the nineteenth report of the Horserace Betting Levy Board. It states "Not to be removed from the Library". My hon. Friend the Member for Workington


(Mr. Campbell-Savours) was not permitted to take the report from the Library. I am willing to sacrifice this volume to him when I have concluded my contribution. It reports on the revenues of the board and the levies on bookmakers. It is clear that the board is doing a useful job. However, there is a bigger job to be done which it cannot do because of the restrictions upon it.
What use will be made of the additional money? What will the Government do to help racing overcome some of the difficulties that I have outlined? I am sure that the Conservative Deputy Chief Whip would answer if he could. It is clear that my right hon. Friend the Member for Wakefield will not answer. Are the Government aware of all the problems that they are creating for the racing industry by imposing the tax? Do they not realise that the tax was not increased by the Labour Government because they realised the many ill consequences for the racing industry?
I do not want to end my contribution without mentioning one important issue. The betting industry has an area of low pay. Friends of mine do marking up for bookies. It is not a well-paid job. One of the consequences of the increase in betting tax will be the impact on the pay of those employed by the bookies. Have the Government considered the consequences of the rise—not from 7·5 to 8 per cent. as the Government claim but from 9 to 10 per cent.—on pay and employment in the betting industry?

Mr. Don Dixon: I have listened intently to my hon. Friend's remarks. I was tempted to intervene when he mentioned "Blaydon Races". I resisted that temptation because I was interested in his speech. He mentioned the shop floor, the conveners, the pottery workers and the miners, but he did not mention the implications of the increase on old-age pensioners. I hope that he will do so. They often like a little flutter, especially on Grand National day. Will my hon. Friend explain the implications of the increase on old-age pensioners?

Mr. Golding: I was hoping to leave that point until I made a contribution later on the other motions relating to bingo and one-armed bandits. I take the point that the increase in betting tax will have an impact on the elderly. Those who will suffer by the squeezing of the levy are those who work in the industry. Stable boys, many jockeys and many of those who work on the racecourses earn very low wages.
There will be a great psychological impact as a result of the change in the operation of the betting tax. Those who bet may be divided into optimists and pessimists. The optimists are those who pay tax on their bets. The pessimists are those who pay on their winnings. In every betting shop one can separate the optimists from the pessimists. The optimists pay tax on their bets. For my bet here I should pay the difference between £2·85 and £3·11 and pay it gladly.

Mr. Cook: Did my hon. Friend win?

Mr. Golding: No one would show a losing betting slip. No one would refer to a losing betting slip. That question reveals the depth of ignorance of my hon. Friend. Would any punter display a losing betting slip?

Mr. George Foulkes: An Irish one might.

Mr. Golding: That is possible. However, I despair of my hon. Friend. How could he ask such a question after hours of tuition? If I had won, I should have had to pay much more tax. It would have been necessary for me to pay a percentage of the winnings rather than a percentage of the stake.
I am concerned that we may be causing the optimists to become pessimists. You sit as silent as a Nonconformist, Mr. Deputy Speaker, but others of my colleagues who have obviously frequented betting shops understand the importance of the social change that the Government are to inflict on the betting shop community. Punters will be hesitant about whether to pay tax on the nail. If a punter puts his money down, he will have to pay 10 per cent. There will be a temptation to take a risk and to pay the tax on the winnings. That will be a bad social change. Have the Government calculated the impact of the change? The answer is probably that it is for the bookie to decide.
Bets have been struck and won and lost tonight. I deplore the fact that those who have laid bets have paid neither tax nor levy and have failed to make any contribution to the bookmaker.
I strongly urge the House to oppose the increase. It is totally unnecessary and unjust and will take a lot more explaining from the Chief Secretary than we had from the slight and insulting introduction earlier at the Dispatch Box.

Mr. Brittan: rose—

Mr. Deputy Speaker: Mr. Leon Brittan.

Mr. Campbell-Savours: On a point of order, Mr. Deputy Speaker. It is noticeable tonight that, following interventions of the Chief Secretary, the Government Chief Whip has sought to move the closure of the debate. May we presume that, as the right hon. and learned Gentleman has sought to intervene at this stage, the Chief Whip intends to do the same again? If so, is not that grossly unfair? Could it be made clear that, as many Opposition Members wish to intervene, we shall be given adequate opportunity to speak on this highly important matter? If the Chief Whip intends to move the closure, it is a gross abuse of parliamentary procedures when many of us have been here for the greater part the night waiting to speak in the debate. Members may feel robbed of the opportunity to put their case. It would be as well if the Chief Secretary would say that it is not the Government's intention to curtail the debate at this early hour of the morning.

Mr. Mikardo: Further to that point of order, Mr. Deputy Speaker. You may have observed that during the debate there have been a number of references to me and to my views, not all of them accurate. It would be a remarkable departure from the normal practices and courtesies of the House if the debate were so truncated that I were not able to make some observations on those references which have been made directly to me.

Mr. Deputy Speaker: Order. With reference to the point of order made by the hon. Member for Workington (Mr. Campbell-Savours), no closure has been moved, as far as I am aware, during the debates on the Ways and Means motions. With regard to the point of order of the hon. Member for Bethnal Green and Bow (Mr. Mikardo),


I am not closing the debate but calling hon. Members to speak. When a member of the Government rose, I thought that he was entitled to speak.

Mr. Foulkes: On a point of order, Mr. Deputy Speaker. I appreciate what you have just said, but so far we have had an introduction by the Chief Secretary and two speeches from the Labour Benches. That is not sufficient before calling on the Chief Secretary to reply to the debate. Surely it would be better to hear a number of other contributions so that the Chief Secretary can properly reply to the debate and not be called a third time to deal with the points which my colleagues and I will make. Would it not he sensible for the Chief Secretary to reply later?

Mr. Campbell-Savours: Further to that point of order, Mr. Deputy Speaker. As my hon. Friend has said, only two Opposition Members have been given the opportunity to speak in the debate. As a relatively new Member of the House, having been elected two years ago, I can recall no precedent for so few Opposition speakers then having to make way for the Government Chief Whip to move the closure against the interests of the whole House. I appeal to you, Mr. Deputy Speaker, to ensure that, whatever the Government's intentions tonight, we have the fairest treatment to ensure that every Opposition view is reflected in this important debate.

Mr. Deputy Speaker: It is not for me to argue the case. I can deal only with the rules of the House. At the moment, the selection of speakers is within my discretion. I am simply selecting speakers. I have called a member of the Government because he rose to speak.

Mr. Cook: Further to that point of order, Mr. Deputy Speaker. It is a matter for the Chief Secretary to decide whether he wishes to intervene now. I should have thought that it would be more advantageous to the House if he intervened later in the debate. That is a matter for him to judge. I accept that it would be a convention of the House that, should he decide to rise in his place, it would be for you to call him, Mr. Deputy Speaker.
However, you referred earlier, Mr. Deputy Speaker, to the fact that no closure motion had been moved. That is, indeed. the case. What has caused anxiety is that the Chief Secretary rising at the Dispatch Box may be preparatory to the moving of such a motion. Should that occur, you will be aware that it is within your discretion whether to accept the motion. I hope that in making your decision you will bear in mind that we have had only one solitary Back Bench contribution, and it would be most unreasonable if the debate were truncated after only that one intervention, particularly when a number of hon. Members have been present throughout the debate, including my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo), to whom reference has been made and who is widely accepted as an expert in the field, certainly in regard to placing bets. Should such a motion be moved by the Government, I hope that you would weigh those factors carefully in the balance.

Mr. Deputy Speaker: The hon. Gentleman has put his point fairly. I assure him that the Chair carefully considers curtailment of a debate or whether to accept a closure motion. However, I am dealing now with the selection of speakers. Mr. Leon Brittan.

Mr. Brittan: The hon. Member for Edinburgh, Central (Mr. Cook) started by developing the general arguments put by his right hon. Friends in the earlier debate on whether it was necessary or sensible to recoup the money that the Government were no longer obtaining through the derv change. I shall not deal with those points, as I have nothing to add to what I said in the earlier debate.
However, the hon. Gentleman went on more specifically to say that, if there was a necessity to recoup—which I readily accept was not his view—it should be done by reference to the concessions that had been made; one should recoup by withdrawing them. He regarded that as logical and invited the Government to revoke the concession, and, in particular, to turn to CTT. He suggested that, if one did that, it would be possible to obtain the money that would otherwise be obtained through the changes proposed in this motion and the two following ones. However, he was not comparing like with like. He was comparing the yield in a full year with that in 1981–82, and for the purposes of recouping we are concerned with the yield in 1981–82.
In the first column of table 2 in the Red Book, one can see that many of the capital tax changes have a negligible cost in 1981–82. In total, the cost to the revenue of the reliefs in 1981–82 is only £5 million, so a withdrawal of the reliefs would make a minuscule contribution to the requirement for recoupment.
Turning to the full-year figures, one finds that the relief on capital taxes will, indeed, cost £35 million, but that is not in 1981–82. Moreover, against that must be offset the anti-avoidance measures which will yield £50 million as table 2 shows. Therefore, the net gain to the revenue in a full year would be £15 million and the net loss in this year would be only £5 million, so I do not accept that that is an option that the Government could be reasonably expected to have applied in seeking a way to handle the matter.

Mr. Cook: I entirely accept the Chief Secretary's point about those figures relating to a full year. I think that the Official Report will show that I made that clear when quoting them to the House by referring to the fact that I was quoting the second column relating to revenue for a full year.
I must pick up the Chief Secretary's last reference to the anti-avoidance change which will produce an additional revenue of £4 million. There is no logical reason to suggest that if the concessions contained in other clauses on relaxation of capital taxation were withheld he would necessarily be obliged to drop the changes in the anti-avoidance rules. As he well knows, those changes are a direct consequence of the ruling on the Vestey case and subsequent publicity. I think that he would be most ill advised, for public relations reasons if for no other reason, to seek to drop them. There is no necessary correlation between that change and the other concessions that the Government have offered to the wealthy.

Mr. Brittan: That is exactly my point. I do not think that there is a necessary correlation, but if the hon. Gentleman chooses to talk about capital taxes he must consider the picture as a whole. He cannot just pick and choose. The point remains that for 1981–82 the figures are quite different and involve only £5 million. The recoupment relates to 1981–82. The figures of £65 million


and £20 million relate solely to 1981–82. What is to happen in 1982–83 is a matter that falls to be considered when the Budget for that year is considered.

Mr. Foulkes: rose—

Mr. Brittan: No, I shall not give way. I must make progress.
The other main question that was raised concerned the suggestion that in some way this measure discriminated against the working class. I was asked why, when revenue was being raised by the increase in this measure and those relating to bingo and machines, there was nothing relating to casino gaming. Following the recommendations of the Royal Commission on gambling, the duty on casinos was completely restructured in the 1980 Budget. I do not pretend that the full recommendations were implemented, but there was a major change. Instead of being based on the rateable value and number of tables of a casino, the new duty is designed to reflect the profitability of particular enterprises.

Mr. Mikardo: Trivial.

Mr. Brittan: The hon. Member for Bethnal Green and Bow (Mr. Mikardo) remarks from a sedentary position that it is trivial. The figures are difficult to assess precisely because there are other changes affecting the industry, including the fact that some casinos are now no longer in operation. On the same basis as 1980–81, however, the yield under the old form of taxation was about £6 million. On that basis, in the absence of the changes which I have said are likely to take place, the yield would now be £18 million. I do not regard a tripling of the yield as trivial.
Transitional arrangements were necessary, and the new duty does not come fully into effect until this year. When a new duty is introduced which on a like basis triples the yield, I think that it is sensible to wait until one can make a realistic assessment of the new duty before making any further changes.
Finally, the hon. Member for Edinburgh, Central spoke of the relative proportions of off-course and on-course duty. I can only say that, to judge from his hon. Friends' reaction, he showed that he has one thing in common with me, namely, that his knowledge of these matters is largely theoretical. I do not claim to have an extensive practical knowledge, although I can claim perhaps a little.

Mr. Foulkes: rose—

Mr. Brittan: No, I am not giving way.
The response of the hon. Friends of the hon. Member for Edinburgh, Central showed that his knowledge was indeed theoretical and not in accordance with experience.

Mr. Foulkes: On a point of order, Mr. Deputy Speaker. The Chief Secretary has constantly referred to a recoupment of £20 million but—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. There can be no point of order arising from what the Chief Secretary says.

Several Hon. Members: rose—

The Parliamentary Secretary to the Treasury (Mr. Michael Jopling): rose in his place and claimed to move, That the Question be now put; but MR.DEPUTY SPEAKER withheld his assent and declined then to put that Question.

Mr. Foulkes: I raised the point of order, Mr. Deputy Speaker, because we are dealing with only one motion, motion No. 5. We have had no reference to the amount of money that is being recouped by it. Motions Nos. 6 and 7 are constantly being referred to—

Mr. Deputy Speaker: Order. The hon. Gentleman may not have been here as long as some other hon. Members, but he knows that the contents of a Minister's speech are nothing to do with the Chair.

Mr. Bruce George: On a point of order, Mr. Deputy Speaker. I have sat impatiently for two and a half hours and listened to a small number of long speeches. I have many genuine points to raise, and I have no intention of filibustering. Yet the Chief Whip has sought to curtail a debate that is just beginning. I urge you, Mr. Deputy Speaker, in the interests of parliamentary democracy and of millions of punters who are waiting for points to be seriously made, to refuse the bogus intervention of the Government Chief Whip.

Mr. Deputy Speaker: I indicated that I was not disposed to accept the motion at that time.

Mr. Jopling: rose in his place and claimed to move, That the Question be now put; but MR. DEPUTY SPEAKER withheld his assent and declined then to put that Question.

Mr. Ian Mikardo: May I on behalf of the House, Mr. Deputy Speaker, thank you very much for the decision that you have just made. It would have been a travesty, a distortion of our normal procedures, if, after a debate in which the Chief Secretary moved the motion, there was a reply from the Opposition Front Bench, there was one Back-Bench speaker, the Chief Secretary spoke again, without asking the leave of the House, so that he had made 50 per cent. of all the speeches—

Mr. Foulkes: Will my hon. Friend give way?

Mr. Mikardo: I hope that my hon. Friend will let me make my point in my own way. I was about to say that it would have been a travesty if the debate had been truncated.
I begin by referring to the points made in the previous debate and this debate about fine tuning and about the Treasury's rather arrogrant, pretentious claim to be able to estimate so precisely future trends in income and expenditure that it can judge to within a fraction of 1 per cent. what an outturn will be. I think that I am right in saying that since we started the debate on the Ways and Means motions I have been the only Member here who was present the first time the Treasury tried out this confidence trick of a fine tuning exercise.

Mr. Walter Harrison: I was here.

Mr. Mikardo: I am sorry. It shows how modest and withdrawing a man my hon. Friend is that we do not notice him when we should.
It was almost exactly 30 years ago, in the Budget of 1951, that the then Chancellor of the Exchequer told us solemnly that he would not be able to balance the Budget if the House refused him a charge on dentures and spectacles that would yield in that year £13 million. Those were the days before we had rocketed into stratospheric and astronomical figures of income and expenditure. But


in real terms £13 million then was a much greater sum than the amount that we are discussing in these Ways and Means resolutions.
The then Chancellor of the Exchequer told us with absolute conviction, and he had all the clever fellows in the Treasury who had put his feet on the path. He said that without that £13 million the Budget could not be balanced. In the outturn, the surplus in the Budget was rather more than 16 times that £13 million. Ever since that day 30 years ago I have always been sceptical of these fancy claims, made with such dogmatism and confidence by the Treasury as though it was dealing with an exact science instead of with a very inexact one.
I turn to some of the implications of this motion. I support very strongly the main argument of my hon. Friend the Member for Edinburgh, Central (Mr. Cook) that this is a discriminatory measure designed deliberately to fall most heavily on the working-class section of the population. That is the key element in this measure.
My hon. Friend the Member for Edinburgh, Central did not get all the detail of the argument right, as he recognised might be the case. If occasionally he was only 99 per cent. right, that is doubtless due to the fact that, as the actress said to the bishop, "No amount of book learning will ever compensate for a lack of practical experience on the job." But the main argument of my hon. Friend was 110 per cent. right. Of all the very many forms of gambling that go on—a lot of them have been mentioned, but a lot more have not—the two that have been picked on in this motion and the one that is to follow it are predominantly the recreation and the practice of the working class. The Government have chosen only those two for an increase.

Mr. Albert McQuarrie: Nonsense.

Mr. Mikardo: There can be no argument about that. It is clear that it is part of the normal practice of the Government of seeking to advantage those who are better off and to disadvantage those who are less well off.
As my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) pointed out, there is some justification for having a lower rate of tax on on-course betting.

Mr. Campbell-Savours: On a point of order, Mr. Deputy Speaker. Is it in order for the hon. Member for Louth (Mr. Brotherton) to be gesticulating with his fist to one of his hon. Friends at the rear of the Chamber?

Mr. McQuarrie: Not in the House.

Mr. Deputy Speaker: Order. The hon. Gentleman will know that the incident to which he referred is not within my sight.

Mr. Mikardo: When my hon. Friend has been here longer, he will get used to the fact that some hon. Gentlemen get hilarious as a result of their supper. The roast beef affects their behaviour. They are always more hilarious after their supper than before. Some of them have not cut their teeth yet and cannot stomach roast beef properly, so they misbehave themselves.
Of all the multifarious forms of gambling, the Government have attacked only those that are working-class habits. There is some justification for having a lower rate on on-course betting. My hon. Friend the Member for Newcastle-under-Lyme exaggerated. It does not take all that much to make a market. That argument is greatly

exaggerated. These days, much of the money comes from the market that is wired to the course from off-course betting shops. It is not the on-course punter who makes the market. I do not think, therefore, that the case is strong enough to justify a rate of tax on off-course betting that is double that of the rate on on-course betting.
It is significant that the motion is confined to off-course betting. It is true, as my hon. Friend said, that some working-class people go to racecourses, but not very often. There were three meetings today. I would imagine that between 12,000 and 15,000 people attended the three meetings. Hundreds of thousands of people have gone into betting shops today, so going to the course is the marginal odd day out occasionally for the working man. It is not his avocation but the avocation of much better-off people. My hon. Friend the Member for Newcastle-under-Lyme, with all his experience, was wrong because the average working man is not induced to go racing because the tax is lower. The ordinary chap who goes to a racecourse and has a fiver on each of the six races spends £30. The tax on £30 is £1·20. He will not go 50 miles to a racecourse, which will cost him a fiver in fares, and pay £2·50 to go in to save £1·20 in tax. One goes to a racecourse because it is a fun day out, not to save the tax.
There is no justification, if the Government wanted to increase the tax on horseracing as one way of getting their own back on their Back Benchers for their misbehaviour over derv, for the increase being confined to off-course bets.
If it had been on both on-course and off-course I would not have gone into the Lobby against it, because there would have been some justification for it. It is the discrimination that gets me. It is discriminatory only between on-course and off-course betting. Casinos have been mentioned. The Chief Secretary read the changes that have been made in casinos. What percentage of the £18 million paid into casinos does a punter pay out? It is microscopic. It is not 8 per cent., 4 per cent. or 1 per cent. It is not a small fraction of 1 per cent. It is microscopic.
I may educate the Chief Secretary in these matters, but the punter in the casino starts, leaving aside the tax, with an advantage over the punter on the horses, because the margin of profit taken by the casino, on the arithmetic of a roulette wheel, is a little under 3 per cent., whereas the margin taken by the bookmaker varies, according to the race, the type of race, and the size of the field, between 5 per cent. and 15 per cent. and probably averages 8 per cent. or 9 per cent. The punter on horses starts with a disadvantage anyhow, and the casino chap starts with an advantage. In addition, he has had a small fraction of 1 per cent. loaded on him in tax, compared with the 8 per cent. on the chap who goes into the betting shop.
There is a world of difference between the betting of the well-off bod in the members' enclosure, who goes to the bookie on the rails and whispers out of the corner of his mouth a bet of £2,000, £3,000 or £4,000, and the betting of Joe Bloggs who goes into the betting shop.
Many Joe Bloggs have the same bet every day—10p each way, each up and down double stakes, "Brer Fox" and "Brer Rabbit" any to come, three cross doubles and a treble, 25p on "White Elephant", "Blue Elephant" and "Green Elephant". That chap lays out his 40p a day and inevitably loses the whole of it or occasionally nearly the whole of it. Once in every three years he will cop, he will get about 20 or 25 quid, according to the prices of the


horses, and he will take the old woman on a day out to the seaside. It is that chap whom the Chief Secretary is penalising.

Mr. Campbell-Savours: Had my hon. Friend been able to attend the Finance Bill Committee, which he was not because of his other busy activities, he would have noticed that Labour Members repeatedly drew attention to the class factor that exists in every area of the Budget strategy. Perhaps he will indicate the extent which he believes class matters—prejudices to a certain extent—have determined the Government's attitude to the way in which they have introduced these levies.

Mr. Mikardo: I regret not having the opportunity to take part in the Finance Bill Committee. While my hon. Friend was enjoying himself there, I was enjoying myself equally in the Committee on the British Telecommunications Bill, on which we also had an interesting Report stage.
Every Conservative Government, in their actions and fiscal policy, discriminate against the working class. They are doing so now by their discrimination between on-course and off-course. They are doing it by leaving all the gambling of the rich virtually untaxed.
I have mentioned casinos. What is the biggest betting shop in Great Britain with the largest turnover by far—a turnover of the same order as the total turnover of all other betting shops put together? It is the Stock Exchange. Only a small fraction of the work of the Stock Exchange is concerned with raising capital for industry.
Although the turnover of our Stock Exchange is very much larger than that of the Bourse in Paris or the Wechsel in Frankfurt, the amount of new capital raised is very much smaller. A far higher proportion of transactions in the Stock Exchange than in any other exchange in the world, with the possible exception of Hong Kong, is speculative rather than genuine commercial investment. It is a gamble.
It is possible to visit the Stock Exchange and stand on a balcony with some nicely garbed young ladies who will explain the processes, if they need to be explained. Anyone who has been in a betting shop does not need to have them explained because the processes are exactly the same. There are the men chalking up the prices on the wall. As soon as a popular figure is chalked up, the punters all rush like mad to get on their bets, elbowing people on the way and not caring who they knock down in the mad rush. It is exactly the same. As soon as the punters have rushed in, the figure is scrubbed off and a different figure is put on. That is exactly the process that goes on in a betting shop. The Stock Exchange is a colossal betting shop, but not one farthing's worth of tax is paid on the transactions.
It is much cheaper to gamble on one's guess about which shares will get their nose first past the post than on which quadruped will get its nose first past the post. It can be done absolutely untaxed.
Some gambling is boring. I never go into a casino, because nothing is more boring than that. I cannot understand people who can stand watching a little ball hopping around in a wheel and purport to make a judgment on which slot the ball will fall into at the end. The only true gambler is the one who will put money on the exercise of his judgment of some issue or who will put money on something where at least he has the illusion that he is

exercising some judgment. But putting money on a ball hopping around the edge of a wheel is for morons. I cannot imagine anyone who was as bright as a half-wit spending his time in that way.

Mr. Golding: I hope that my hon. Friend will not go too far along this line, because I hope later to be arguing the cause of bingo. As my hon. Friends know, bingo is dependent upon the little balls bouncing around and coming out in a particular way. Those whom I represent and who love bingo cannot be described as morons.

Mr. Mikardo: My only observation on my hon. Friend's intervention is that I do not play bingo, for the same reason as I do not play roulette. But I have been talking about the rich man's gambling on the Stock Exchange that goes absolutely scot-free.
Anyone who gets bored with the Stock Exchange can go down the road a few hundred yards to one of the commodity exchanges. Only a microscopic part of the work of the commodity exchanges is concerned with supplying goods from those who want to sell them to those who want to buy them. The great majority of the work is gambling. One bets on one's assessment of whether cocoa or tin or whatever it may be will be dearer or cheaper in three months' time than it is now. About 98 per cent. of all the transactions on the commodity exchanges consist of buying things one does not want or selling things one has not got. That is what all the business of futures is about. It is a gamble, and there is not a penny of tax paid on any of it. I could list many more.

Mr. Campbell-Savours: Lloyd's.

Mr. Mikardo: Yes, in a way, but it is not quite parallel. There is a common strain that runs through them all. We shall see it again when we come to the motion dealing with bingo. I shall look forward to joining my hon. Friend the Member for Newcastle-under-Lyme in making some observations on that.
The Government wanted to recoup a part of the lost £85 million out of gambling. What did they do? They looked around and they found the only two forms of gambling which are predominantly conducted by the working class, and they increased the duty on those and on no other forms of gambling. This will be noted among the people of the country. I dare say that it will be noted among some people in Warrington between now and the end of the week. It will not go unremarked, unnoticed or unreminded. It shows the Government in their true colours as the most class-ridden institution in this country.

Mr. Michael Jopling: rose in his place and claimed to move,That the Question be now put.

Question put, That the Question be now put:—

The House divided: Ayes 133, Noes 21.

Division No.249]
[3.15 am


AYES


Alexander, Richard
Boscawen, Hon Robert


Ancram, Michael
Bottomley, Peter (W'wich W)


Arnold, Tom
Boyson, Dr Rhodes


Baker, Kenneth(St. M'bone)
Braine, Sir Bernard


Baker, Nicholas (N Dorset)
Bright, Graham


Banks, Robert
Brinton, Tim


Beaumont-Dark, Anthony
Brittan, Leon


Benyon, Thomas (A'don)
Brotherton, Michael


Benyon, W. (Buckingham)
Brown, Michael (Brigg &amp; Sc'n)


Berry, Hon Anthony
Browne, John (Winchester)


Best, Keith
Bruce-Gardyne, John


Biggs-Davison, John
Buck, Antony


Blackburn, John
Bulmer, Esmond






Butcher, John
Moate, Roger


Cadbury, Jocelyn
Morgan, Geraint


Carlisle, John (Luton West)
Morrison, Hon P. (Chester)


Carlisle, Kenneth (Lincoln)
Neale, Gerrard


Clark, Hon A. (Plym'th, S'n)
Neubert, Michael


Clarke, Kenneth (Rushcliffe)
Newton, Tony


Clegg, Sir Walter
Onslow, Cranley


Colvin, Michael
Osborn, John


Cope, John
Page, John (Harrow, West)


Corrie, John
Page, Rt Hon Sir G. (Crosby)


Cranborne, Viscount
Page, Richard (SW Herts)


Douglas-Hamilton, Lord J.
Parris, Matthew


Dover, Denshore
Patten, Christopher (Bath)


Dunn, Robert (Dartford)
Pattie, Geoffrey


Emery, Peter
Proctor, K. Harvey


Fairgrieve, Russell
Rees, Peter (Dover and Deal)


Faith, Mrs Sheila
Renton, Tim


Fenner, Mrs Peggy
Roberts, M. (Cardiff NW)


Fletcher-Cooke, Sir Charles
Roberts, Wyn (Conway)


Fookes, Miss Janet
Sainsbury, Hon Timothy


Gardiner, George (Reigate)
Shaw, Giles (Pudsey)


Garel-Jones, Tristan
Shersby, Michael


Goodlad, Alastair
Silvester, Fred


Gow, Ian
Skeet, T. H. H.


Greenway, Harry
Speed, Keith


Griffiths, E.(B'y St. Edm'ds)
Speller, Tony


Griffiths, Peter (Portsm'th N)
Spicer, Jim (West Dorset)


Grist, Ian
Spicer, Michael (S Worcs)


Gummer, John Selwyn
Sproat, Iain


Hamilton, Hon A.
Squire, Robin


Hawkins, Paul
Stainton, Keith


Hawksley, Warren
Stanbrook, Ivor


Heddle, John
Steen, Anthony


Henderson, Barry
Stevens, Martin


Hogg, Hon Douglas (Gr'th'm)
Stradling Thomas, J.


Hunt, David (Wirral)
Taylor, Teddy (S'end E)


Jopling, Rt Hon Michael
Thomas, Rt Hon Peter


Kershaw, Anthony
Thompson, Donald


Lang, Ian
Thorne, Neil (Ilford South)


Le Marchant, Spencer
Townend, John (Bridlington)


Lester, Jim (Beeston)
Trippier, David


Lloyd, Peter (Fareham)
Viggers, Peter


Macfarlane, Neil
Waddington, David


MacGregor, John
Wakeham, John


MacKay, John (Argyll)
Walker, B. (Perth )


McQuarrie, Albert
Waller, Gary


Major, John
Watson, John


Marlow, Tony
Wells, Bowen


Marshall, Michael (Arundel)
Wheeler, John


Maude, Rt Hon Sir Angus
Wickenden, Keith


Mawby, Ray
Wolfson, Mark


Maxwell-Hyslop, Robin



Mellor, David
Tellers for the Ayes:


Meyer, Sir Anthony
Mr. Carol Mather and


Miller, Hal (B'grove)
Mr. Peter Brooke.


Mills, Iain (Meriden)





NOES


Ashton, Joe
Mitchell, Austin (Grimsby)


Campbell-Savours, Dale
Powell, Raymond (Ogmore)


Cook, Robin F.
Sheldon, Rt Hon R.


Cryer, Bob
Skinner, Dennis


Cunliffe, Lawrence
Straw, Jack


Cunningham, Dr J. (W'h'n)
Tinn, James


Dixon, Donald
Welsh, Michael


Foulkes, George
Woolmer, Kenneth


George, Bruce



Golding, John
Tellers for the Noes:


Harrison, Rt Hon Walter
Mr. Frank Haynes and


Hooley, Frank
Mr. Allen McKay.


Mikardo, Ian

Question accordingly agreed to.

Question put accordingly:—

The House divided:Ayes 109, Noes 22.

Division No. 250]
[3.25 am


AYES


Alexander, Richard
MacGregor, John


Ancram, Michael
Major, John


Baker, Nicholas (N Dorset)
Marlow, Tony


Banks, Robert
Maude, Rt Hon Sir Angus


Beaumont-Dark, Anthony
Mawby, Ray


Benyon, Thomas (A'don)
Maxwell-Hyslop, Robin


Benyon, W. (Buckingham)
Mellor, David


Berry, Hon Anthony
Meyer, Sir Anthony


Best, Keith
Miller, Hal (B'grove)


Biggs-Davison, John
Mills, Iain (Meriden)


Blackburn, John
Moate, Roger


Boscawen, Hon Robert
Morgan, Geraint


Boyson, Dr Rhodes
Neale, Gerrard


Braine, Sir Bernard
Neubert, Michael


Bright, Graham
Newton, Tony


Brinton, Tim
Onslow, Cranley


Brittan, Leon
Osborn, John


Brown, Michael(Brigg &amp; Sc'n)
Page, John (Harrow, West)


Browne, John (Winchester)
Page, Rt Hon Sir G. (Crosby)


Bruce-Gardyne, John
Page, Richard (SW Herts)


Butcher, John
Pattie, Geoffrey


Cadbury, Jocelyn
Proctor, K. Harvey


Carlisle, John (Luton West)
Rees, Peter (Dover and Deal)


Carlisle, Kenneth (Lincoln)
Renton, Tim


Clark, Hon A. (Plym'th, S'n)
Roberts, M. (Cardiff NW)


Clarke, Kenneth (Rushcliffe)
Roberts, Wyn (Conway)


Clegg, Sir Walter
Sainsbury, Hon Timothy


Colvin, Michael
Shaw, Giles (Pudsey)


Cope, John
Silvester, Fred


Cranborne, Viscount
Skeet, T. H. H.


Dover, Denshore
Speed, Keith


Dunn, Robert (Dartford)
Speller, Tony


Fairgrieve, Russell
Spicer, Jim (West Dorset)


Faith, Mrs Sheila
Stainton, Keith


Fenner, Mrs Peggy
Stanbrook, Ivor


Fletcher-Cooke, Sir Charles
Stevens, Martin


Fookes, Miss Janet
Stradling Thomas, J.


Gardiner, George (Reigate)
Taylor, Teddy (S'end E)


Garel-Jones, Tristan
Thomas, Rt Hon Peter


Goodlad, Alastair
Thompson, Donald


Griffiths, E.(B'y St. Edm'ds)
Thorne, Neil (Ilford South)


Griffiths, (Peter Portsm'th N)
Trippier, David


Grist, Ian
Viggers, Peter


Hamilton, Hon A.
Waddington, David


Hawkins, Paul
Wakeham, John


Hawksley, Warren
Walker, B. (Perth)


Heddle, John
Waller, Gary


Henderson, Barry
Watson, John


Hogg, Hon Douglas (Gr'th'm)
Wells, Bowen


Jopling, Rt Hon Michael
Wheeler, John


Kershaw, Anthony
Wickenden, Keith


Lang, Ian
Wolfson, Mark


Le Marchant, Spencer



Lester, Jim (Beeston)
Tellers for the Ayes:


Lloyd, Peter (Fareham)
Mr. Peter Brooke and


Lyell, Nicholas
Mr. Selwyn Gummer.


Macfarlane, Neil





NOES


Ashton, Joe
McKay, Allen (Penistone)


Campbell-Savours, Dale
Mikardo, Ian


Cocks, Rt Hon M. (B'stol S)
Mitchell, Austin (Grimsby)


Cook, Robin F.
Powell, Raymond (Ogmore)


Cryer, Bob
Sheldon, Rt Hon R.


Cunliffe, Lawrence
Skinner, Dennis


Cunningham, Dr J. (W'h'n)
Straw, Jack


Dixon, Donald
Welsh, Michael


Foulkes, George
Woolmer, Kenneth


George, Bruce



Golding, John
Tellers for the Noes:


Harrison, Rt Hon Walter
Mr. James Tinn and


Hooley, Frank
Mr. Frank Haynes.

Question accordingly agreed to.

Resolved,


That the general betting duty chargeable under section 1 of the Betting and Gaming Duties Act 1972 or section 16 of the Miscellaneous Transferred Excise Duties Act (Northern Ireland) 1972 in respect of any bet made on or after 12th July 1981 which is not an on-course bet within the meaning of the section in question shall be of an amount equal to 8 per cent. of the amount staked.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

WAYS AND MEANS

Bingo Duty

The Chief Secretary to the Treasury (Mr. Leon Brittan): I beg to move,
That, as from 27 July 1981, section 17(2) of the Betting and Gaming Duties Act 1972 shall have effect—

(a) with the substitution for "7½ per cent." (in both places) of "10 per cent.";
(b) with the substitution for "three thirty-sevenths" of "one-ninth".
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
The motion proposes an increase in the rate of bingo duty from 7½ per cent. to 10 per cent. Profits cannot be made from the stake money in bingo. Therefore, under the new proposals, 90 per cent. of the stake money will remain to be returned to players as prizes. This form of gambling is one that can withstand the duty increase. I am conscious that there is an area of possible anomaly in the duty structure which is related to the level of duty. There have been complaints from licensed bingo clubs that they are faced with unfair competition from registered clubs that provide bingo on a large scale but under conditions that carry exemption from duty. I understand the basis of the complaints made by the licensed bingo clubs that are faced with that competition.
The Commissioners of Customs and Excise have been asked to review the scope of the present exemptions, especially for registered clubs that provide prizes totalling £1,000 or more in a week. The commissioners would much appreciate it if interested parties let them know their views on this issue for the purpose of consideration and for the review that is taking place. That issue is separate from the level of the bingo duty and the increase from 7½ per cent. to 10 per cent., which seems to the Government to be a reasonable increase.

Mr. Austin Mitchell: Is the right hon. and learned Gentleman saying that because the Government have increased the levy on the regular bingo halls in an unjustifiable fashion they are now being driven to persecute the licensed clubs as well? If a licensed club is having bingo every night, and perhaps two or three sessions, the prize money that comes from that activity will be equated with the larger prizes from one or two sessions that some clubs offer.

Mr. Brittan: None of that relates to the motion.

Mr. Michael Cocks: What is the answer?

Mr. Brittan: The answer is that the motion merely increases the rate of duty payable from 7½ per cent. to 10 per cent.
The other matter which I referred to does not arise on this motion, but it is a convenient opportunity for me to say that we are aware that there are criticisms of the structure of the exemptions and that if those who are interested would care to inform the Commissioners of Customs and Excise of their views on the best way of dealing with the criticisms which have been made, that can be considered in the course of the review.

Mr. Jack Straw: The Chief Secretary said that it would be for the convenience of the House for him to announce that not only is the rate of duty on bingo being increased by 33 per cent. this year, having gone up by 33 per cent. last year, meaning a doubling over the last two years, but that registered clubs—by which we mean miners' welfare institutes and working men's clubs up and down the country—are also likely to be penalised by the Government by a change in the Customs and Excise concessions towards them in terms of the present arrangements which they enjoy. I am sure that the Club and Institute Union, the miners' welfare institutes, the other working men's clubs up and down the country and the trades council clubs will be deeply indebted to the Chief Secretary for the fact that he chose to announce that decision at 3.39 am without notice.

Mr. Austin Mitchell: And that he refused to answer questions on it.

Mr. Straw: That is right. We know from the Chief Secretary that he and his colleagues are now making a habit of not giving notice when they come to make important statements on taxation changes. When they came to the House last Thursday, they did not have the decency or the courage to make a proper statement which Opposition Members could have in their hands beforehand, but they slipped out the announcement by way of an oral answer to a question at 3.30 pm.
When the derv duty was debated on 30 April, the Opposition challenged the Government, particularly the Chancellor of the Exchequer, to say where the £85 million which he was giving back to the transport hauliers by way of the reduction in the derv duty would come from, given the fact that the Government insisted that the money would have to come from somewhere. I asked him whether that concession would be paid for by the rich or the poor. No answer was given to me, as happened to many of my hon. Friends.
The hon. Member for Aberdeenshire, East (Mr. McQuarrie) came out with a long list of suggestions as to how the money could be raised. He did not place first in his list the suggestion that the money should be raised by increasing gambling and betting duties. The first item in his list was to increase the dog licence from 37½p a year to £10 a year. On his estimate, which we must accept as we know what a master with figures he is, there are 6 million dogs. Six million multiplied by £10 equals £60 million. At a stroke, two-thirds of this money would be raised by increasing the dog licence. He also suggested a penny on beer and 10p on a bottle of wine.
One of the significant things about the debate has been the absence of the man who caused it, the hon. Member for Aberdeenshire, East. It was he who forced this concession out of the Government. He was here between 11 pm and 11.25 pm and again for a short moment at 2.51 am. I saw him walking down the corridor back to his bed shortly after the last Division. The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) was right to ask "Where is he?" from a sedentary position at 11.30 pm, referring to the hon. Member for Aberdeenshire, East. It is noticeable that the hon. Gentleman has not had the courage to come here to castigate the Government for not accepting his suggestion. Why is he not here to continue his crusade to increase the

dog licence fee by 3,000 per cent., from 37½p to £10, or to add 10p to the price of a bottle of wine, which he said would raise another £50 million?
More seriously, the Government could easily on 30 April have told us how they intended to raise the £85 million. They had six weeks between being served notice of a Back-Bench revolt on the Budget and petrol duty being debated in the Finance Bill. They could have announced that they intended to raise the £85 million by increasing tobacco and betting and gaming duties then. They failed to do so because they lacked the courage to force their Back Benchers to face the choices that they believe should be faced.
We do not accept those choices. The £85 million concession on derv should not be paid for by increasing taxation in this way. As many of my right hon. and hon. Friends have said, to raise £85 million by fiscal means is to increase the deflationary effects of the Government's policies, to increase unemployment and, as a result, to increase the deep-seated social tensions that led to the tragedies that we have seen this weekend.
Unlike my hon. Friend the Member for Batley and Morley (Mr. Woolmer), I might mind a little less if the Government said that the £85 million would be used to offset some of the damage that they had done to our economy—to regenerate British industry and to replace some of the money that they have taken from our hard-pressed regions and from Scotland and Wales. However, instead of that, the Government are, in fact, cutting regional assistance, particularly in Yorkshire and Humberside and in the North-West. In North-East Lancashire, where unemployment has more than doubled in the past 15 months, at a time when we need assistance the most, our regional assistance is to be ended. That also applies in North Cheshire. Warrington is affected, among other areas. The regional and new town assistance that that great borough enjoyed under a Labour Government will come to an end as a result of the announcements made two years ago. The Government have not changed their minds, despite the massive increase in unemployment.
No one can tell me that even the dolt-heads in the Government believed in their worst moments that unemployment—

Mr. Ray Mawby: On a point of order, Mr. Deputy Speaker. I understand that we are discussing a tax on bingo. I do not see how the hon. Gentleman's comments relate to that.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): I am hoping that it will become apparent in a short time.

Mr. Straw: I am sorry that it was not apparent already.
We are considering whether we should approve an increased tax on bingo. The Government may believe that what they decide they can also dispose of, but we believe that the House has a role to play in agreeing or disagreeing with such proposals. In deciding whether to approve or disapprove of increases in taxation, we have to examine the Government's fiscal judgment, the reasons why they are seeking to raise taxation and how they say that the revenue will be used.
As many of my hon. Friends have said, if the Government had said that they would use some of the additional taxation being raised to help the worst-hit regions and to alleviate some of the damage and the serious unemployment that they have caused, we might have


looked on the proposals rather differently. But none of that has been within the justification put forward by the Government for this increase in taxation. Indeed, virtually no economic or fiscal argument has been advanced, and certainly no suggestion has been made that the money would be used to help our hard-pressed regions.
We do not accept that raising this money is either necessary or desirable. We say on the question of raising bingo duty, as we have said on the other increases in duty that we have discussed today, that if the money must be raised—and we do not accept that hypothesis—it is wholly inequitable to raise it in this way.
We know why the Government have gone for the so-called leisure pursuits of tobacco and gambling. It is because they can say that this is optional expenditure which does not really affect the economy. But we also know that the Government have not in any sense been even-handed as between the rich and the poor in their treatment of leisure pursuits. That argument was well rehearsed in previous debates, but the simple truth bears repeating.
With due deference to my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding), while the rich are often seen at casinos and on-course betting, they would not be seen dead in betting shops or bingo halls. But millions of people go regularly to bingo. On the whole, they are women from lower-income families, predominantly in the North and the North-West. Bingo is one of the largest leisure activities in this country. According to the gambling statistics put out by the Home Office earlier this year, between 5 million and 6 million people in this country are regular bingo players. The average daily attendance at bingo halls in 1978 was 424,000, so the daily attendance is about half a million people. More significantly, as many of us know, the overwhelming proportion of those who play in bingo halls are working women over the age of 30.

Mr. Michael Cocks: It is a sexist attack.

Mr. Straw: As my right hon. Friend the Chief Whip says, it is also a sexist attack. It is an attack on women, particularly working women. It is an attack on women with families and on middle-aged women, because 91 per cent. of those who play in bingo halls are over 30 years old. The Chief Secretary sneers at that. He has probably never seen a bingo ticket in his life. He does not understand that for many people tied to a humdrum job or to looking after a family, or both, a visit to the bingo hall is not something to be sneered at. A visit to the bingo hall once, twice or three times a week is a chance to have some kind of social activity and to inject some interest and excitement into their lives. It is also a chance for single people, particularly the elderly—and many participants in bingo are elderly—to meet others and to break the loneliness of their lives. It is a class issue and a sexist issue. It is also, as the gambling statistics show, an issue between North and South, because a much higher proportion of people in the North than in the South bet in bingo halls.

Mr. D. N. Campbell-Savours: The Chief Secretary happens to be a Member for a Northern constituency, in which there will be tens of thousands of women who play bingo. Will the right hon. and learned Gentleman be willing to laugh as much in front of them as he is laughing here tonight?

Mr. Straw: The Chief Secretary is no doubt much relieved that because of the difficulties of running the economy he has spent little time in his constituency in recent weeks. He claims to understand about bingo. Therefore, we shall listen with interest as he calls out the numbers in his winding-up speech.
We say that raising the money in this way is inequitable. If the Government wished to raise this amount of revenue, there were other ways which would have been far more equitable.
The Government should take back the handouts to the rich that they gave not only in the latest Budget but in the previous two. In his reply to my hon. Friend the Member for Edinburgh, Central (Mr. Cook), the Chief Secretary made much in the last debate of the relatively low take of the concessions on capital transfer tax and capital gains tax that would accrue in this financial year as a result of the changes made in this year's Budget. That is correct, but only as far as it goes. What the Chief Secretary forgot or failed to mention was the massive size of the handouts to the rich made by this Government over the past three years.
First, in the 12 June 1979 Budget a total of £863 million was dished out to the rich in just two ways—changes in higher rate thresholds, at £662 million, and increases in the investment income surcharge thresholds of £201 million. Of course, before the last election many people were crying their eyes out on our surgery doorsteps over the hardship that was being caused by the levels of the investment income surcharge thresholds.
In last year's Budget a further £388 million was dished out to the rich. There was a £106 million increase in the higher rate threshold to £11,250. Another £86 million resulted from changes in higher rate thresholds higher up the bands. There were a £31 million increase in the investment income surcharge threshold; £20 million income tax relief for capital losses; £65 million from a £3,000 exempt slice for individuals and a £1,500 exempt slice for trustees in capital gains tax; £5 million rollover relief for lifetime gifts; and a £125 million increase in the thresholds of capital transfer tax.
Those figures were at 1979 and 1980 prices. The value today of the concessions that the Government made in their first two Budgets, leaving aside the massive concessions that they made in the latest Budget, is not less than £1,500 million. Those concessions were made at exactly the time that last year £901 million was taken from the poorest taxpayers by the abolition of the lower rate bands. That is a measure of this Government's social priorities.
It was not only the Government who were pleased about the changes. Their supporters outside were desperate for these changes in the taxation of the rich. The Government justified them not on grounds of greed but because they formed an essential part of the Government's Budget strategy to get Britain back to work, to provide opportunities and incentives, in the words of the Chancellor in the 1979 Budget.
In a letter written after the June 1979 Budget, the then director-general of the CBI reported the view of the CBI council. It reads like a piece of ancient history, but it is worth reminding the CBI as well as the Government how the strategy unfolded and how the Government have almost entirely lost their way.
The resolution of the CBI council dated 28 June 1979 reads:


This council fully supports the strategy and direction of the Budget … The CBI council calls on all CBI member firms to do everything in their power through efficient and competitive management of their enterprises to ensure that the policies which the CBI has long advocated and which are now being pursued by the Government lead to higher productivity, higher living standards, more jobs and a more successful economy in the interests of the British people as a whole.
The CBI's claim was that those tax cuts would lead to higher productivity, higher living standards, more jobs and a more successful economy in the interests of the British people as a whole. We all know that as events have unfolded the Budget strategy of 1979 has led to lower productivity, lower living standards, as we are discovering, fewer jobs and a less successful economy in the had interests of the British people as a whole.
Not only have the Government doled out £1,500 million to the rich. They have also, as we discover on a careful examination of the Finance Bill, failed properly to plug the Vestey loophole. The Chief Secretary is proclaiming proudly that in a full year what the Government have tried to do on the Vestey loophole will bring in £4 million. But they are using a tiny plug to plug a massive and yawning hole, and the Minister of State as well as the Chief Secretary knows that the Government's propositions in no way put the law back to the position it was in before the judgment of the House of Lords in the Vestey case in November 1979.
If the Government had been serious about taxing the income accruing to overseas trusts held for the benefit of British residents, and if they had taxed all the income arising on those trusts whether received in this country or not, they could have realised 10 times the amount that they are seeking to raise with these motions. But, of course, their social priorities mean that they wish to provide a system of taxation which is as voluntary as possible for the rich while being as tough as possible for the poor.
While on the issue of the Vesteys and the Government's failure to raise taxation in that way, I draw attention to a report which appears in the Financial Times of Tuesday 7 July. It appears that the deputy treasurer of Imperial Chemical Industries, a Mr. Archie Donaldson, has put forward three propositions in an article in a leading financial journal, "The Treasurer", the magazine of the British Association of Corporate Treasurers, to evade the reimposition of exchange controls by this Government or by a future Labour Government. The proposals involve the transfer of the ownership of overseas businesses to offshore companies, the setting up of offshore companies to handle part of the parent company's liquidity management, and the establishing of offshore trading companies.

Mr. Deputy Speaker: Order. I remind the hon. Gentleman that this motion deals with bingo.

Mr. Straw: I do not wish to stray from the motion, but this is relevant because we are discussing other ways in which the money could be raised. That is why I mentioned the Vesteys and the way in which the deputy treasurer of ICI is proposing arrangements similar to those used by the Vesteys to seek to pre-empt and evade the reimposition of exchange controls by the Government or a future Government. It is a thorough-going disgrace for the deputy treasurer of one of Britain's major companies to do that, and he should be condemned by the Government at the first opportunity.

Mr. K. J. Woolmer: Does my hon. Friend agree that it is the abolition of exchange controls that has enabled so much money to go out? I understand that that deputy treasurer of ICI is seeking to avoid the need for wealthy companies to pay some of the taxes that will be far in excess of what is suggested by the measure. If the Government wanted to assist in keeping taxation down and the number of jobs up, they would reintroduce exchange controls, keep investment in this country and make sure that British companies paid British taxes.

Mr. Straw: My hon. Friend is correct. If the Government had kept exchange controls in place and forced companies and pension funds to invest their money in this country and had prevented the gambling and Vestey-type arrangement that the deputy treasurer of ICI is now proposing, there would have been more revenue and a more buoyant economy than we have.
In all the changes that the Government have made to provide handouts to the rich in the Budget as well as in previous Budgets, they have enjoyed the silent support of the Social Democratic Party. Its representative has rarely been present. I am glad that one representative slid in at a quarter to four in the morning. But he has barely been present at any time, on the Floor of the House or in Committee.

Mr. Austin Mitchell: It might return us to the subject we are discussing if I were to say that the Government's economic policy, the Social Democratic Party and bingo have one thing in common: they involve a lot of balls.

Mr. Straw: They also involve massive gambles that do not come off. It is not surprising that the Conservative Party and the Social Democratic Party have a common approach to tax handouts to the rich, given the earnings of the erstwhile leader of the Social Democrats, Mr. Roy Jenkins. While he was President of the EEC Commission he earned £62,376. Now he has retired, for the next three years he will receive 50 per cent. of that, almost £32,000. The electors of Warrington should know how Mr. Roy Jenkins has lined his pockets from the EEC Commission.

Mr. Michael Welsh: Tax-free.

Mr. Straw: He received not only £62,376 but a lump sum allowance of £5,700 for representational purposes and residential and household allowances of 15 per cent. and 5 per cent. of his basic salary. That is paid by the taxpayers of this country, including the taxpayers of Warrington. When he is 65 he will receive a pension of 18 per cent. of his salary. I am sure that we shall weep for him, because that is about £11,000 tax-free.

Mr. John Golding: Would my hon. Friend describe that as a full house?

Mr. Straw: We oppose all the motions before the House, because they are harmful to the economy, to employment, and to the people of this country. They are irrelevant to the make-believe world which is inhabited by Treasury Ministers. They are motivated by a serious consideration not of economic policy but of the Government's economic policy. There is a need to maintain discipline in the ever more divided and demoralised Conservative Party, as we learn from the increasing and more strident tones of the right hon. Member for Sidcup (Mr. Heath).
This amounts to a spiteful and mean £85 million slap on the wrist by the headmistress to punish Conservative Back Benchers for their revolt. That would be all right but for the fact that the £85 million penalty will be paid for by millions of working people who can least afford it. Once again, those people are being penalised for the mistakes and the bog-up that has been made by the Government. We oppose and shall fight this increase in taxation as we have fought the increases in all the motions.

Mr. Michael Welsh: I should like to say that I was speaking to a full House, but this sparse attendance will be the result in many bingo halls in the North when this tax is imposed. That will be embarrassing to the working class when they go to those bingo halls. It is not embarrassing to me because, although I am a reasonably new Member, I am used to the fact that not many Conservative Members attend when we are discussing attacks on the working class.

Mr. Bob Cryer: Perhaps my hon. Friend will comment on the number of Tories who are interested in imposing extra taxes on the working class compared with their total absence tonight. Perhaps he will also bear in the mind the contrast when the Lloyd's Bill was discussed, by which many of them lined their pockets in addition to obtaining their parliamentary salaries. On that occasion, the Conservative Benches were packed, as though it was a massively important debate—

Mr. Deputy Speaker: Order.

Mr. Cryer: In fact, they were talking about their own financial interests—

Mr. Deputy Speaker: Order.

Mr. Cryer: On a point of order, Mr Deputy Speaker. I would be obliged if you said why you called me to order, because the reason was unclear.

Mr. Deputy Speaker: I called the hon. Gentleman to order because he was not in order.

Mr. Welsh: I have always accepted the fact that many Conservative Members are here for self-preservation. I would like to think that they are here for the benefit of the nation and everyone who lives here.
It would not be right for me to speak on bingo if I did not declare an interest. My wife plays bingo. I am pleased that she does. When Northern Members of Parliament stop here five days a week, like most Labour Members do, their wives are entitled to some sort of pleasure.
I live in a colliery village. My wife goes to bingo. Up to six months ago, she went to Carcroft bingo hall. The burden of the tax was then so heavy that it closed down.
I am not complaining if that is the name of the game. My wife must now travel two and a half miles to Brodsworth to play bingo, and I do not complain about that. However, if the tax is further increased, I shall have to put my foot down. I do not mind my wife playing bingo, but I doubt whether I shall be able to afford the fare for her to go from one area to another. Therefore I strongly object to the increase, if only from the aspect of looking after one's sweetheart's interests at those times when one is away from home.

Mr. Golding: I hope that my hon. Friend will take a charitable and generous view towards his wife's bingo. My hon. Friend the Member for Grimsby (Mr. Mitchell) admitted earlier that he got so cross about the ashtrays—his wife being a smoker—that sometimes he threw them out of the window. I hope that my hon. Friend the Member for Don Valley (Mr. Welsh) will take a more generous view of his wife's activities than that.

Mr. Welsh: My wife is bigger than I am. But, of course, this is a serious debate on bingo and on the working people's pursuit of felicity. I can assure my hon. Friends that I have no arguments with my wife. I have always agreed that she is the boss, and that is the end of it—there is no dispute.

Mr. Austin Mitchell: If my hon. Friend were involved in the pursuit of Felicity it might be otherwise.

Mr. Welsh: Of course, like good married couples, we fall out sometimes. In fact, I often feel like strangling her. But I would never dream of divorcing her—never.

Mr. Allen McKay: I hope my hon. Friend will forgive his wife for playing bingo, because bingo has a very powerful pull. It brings in the males as well as the females. One of my local working men's clubs had a strip-tease act for six weeks and decided after all that as it was losing customers it would have to go back to bingo.

Mr. Welsh: It was morally right that the club should go back to playing bingo. However, if the tax is imposed, we may find that some will return to their previous hobbies. The mining villages would be afraid of that happening because of the great moral standing that they like to maintain.
In moving the motion, the Minister referred to institutions other than Mecca paying more than £1,000 a week in prizes and said that those institutions might also be taxed. That would be terrible. Working men's clubs often have four or five houses at about £25 each. There are also many religious bodies which have bingo in their church halls—and quite rightly so, because it helps to bring in funds for the church. If their members come to the hall to play bingo, and more than £1,000 a week is involved—that could easily happen, with inflation as it is—they might be taxed. There are also certain charities which organise bingo.
When the Government introduced the 15 per cent. VAT in their first Budget and included VAT on charities, I thought that it was an insult to those who worked so hard to bring happiness to people in need. Now we have another attack on those people. It is deplorable. I hope that the Minister will reconsider the proposal and that he will not allow its imposition on working men's clubs, charities and other bodies that try hard to help people.
We are discussing a mini-Budget. Only a number of weeks have elapsed since the Budget itself. Now we have a completely different proposal. Was there any dialogue with Conservative Members before the Budget? Or was the Budget introduced by the Chancellor of the Exchequer on the lines of "You will follow me into the Lobby, rightly or wrongly"? If the latter, one must question the definition of democracy in the party now in Government. I do not wish to see the Conservative Party lose its deposit in the coming by-election. The party needs all the money it can get. One cannot avoid saying, however, that a vote for the


Conservative candidate means that he can come to the House of Commons but he will do as he is told. Only a revolution in the party will change that situation.
People outside Westminster will ask why the Government have changed their mind. Why has the Minister proposed to increase the tax on bingo and made it the subject of review? I have not heard about any similar proposal in respect of yachts. Every weekend, in my village, the miners go down to the seaside to sail their yachts to the south of France. I am sure that they would not grumble if they were taxed.

Mr. Campbell-Savours: My hon. Friend might be interested to know that if he was able to take time off to talk to people in the yachting fraternity on the French and Italian rivieras he would find that there are now a greater number of English-speaking people and British nationals who own yachts there than at any time since the 1930s. The reason is that a great number of British people are taking their money out of the United Kingdom and investing in yachts in those locations.

Mr. Welsh: I am grateful to my hon. Friend. That is most probably what is happening. Why are those yachts not taxed before they leave the country? Why not tax more of the things enjoyed by the rich? The reason is that the party in power is determined to attack only one section, namely, the working class.
I ask the Minister to tell me of one Bill in which the present Government have attacked the rich. Nobody can describe such a Bill. All the present Government's Bills attack the poor and the working class. The attack on bingo is an attack against the working class. That is why the present Government are in office. They should be proud of that. They should stand up and say "We are here to attack the working class". I should be ashamed. I do not want to attack the needy. I want to attack the greedy.
I am not an economist or finance man like the Minister, who is well educated in this sphere, but I believe that if the bingo hall in Carcroft is closed because it does not pay—probably because the tax is too high—and my sweetheart has to go to another hall to play, that hall might also have to close if the tax burden is increased. The law of diminishing returns might then come into play. Instead of achieving the sum desired, less will be produced.
If the Government do not achieve what they desire tonight, will they come back and tax the working class on something else?

Mr. Golding: Is not my hon. Friend in danger of encouraging a law of diminishing returns if the Government think that that might diminish the returns of working-class people?

Mr. Welsh: I come from Yorkshire. I hope that one of our cricketers will hold the fort for the country today. However, I should like to mention another place which is not often talked about in Yorkshire because it is on the other side of the Pennines. I have nothing against Lancashire. It has produced some good cricketers.

Mr. Lawrence Cunliffe: I have tried to aid and nurture my hon. Friend in attacking the Government. I wish that he would respond. There exists between Lancashire and Yorkshire not a feud but a peace settlement.

Mr. Welsh: I did not mean to say anything to hurt my hon. Friends from Lancashire. Lancastrians can play

cricket. If the law of diminishing returns applies, what will the Government tax next? All that I can think of—with respect to my friends from Lancashire—is clogs. Many kiddies in Lancashire and Yorkshire wear clogs. Clogs are coming back into use, because, due to the burdens imposed by the Government people cannot afford other footwear. But what will the Government tax if they do not get the necessary money from taxing clogs?

Mr. Austin Mitchell: My hon. Friend should not mention any more objects that are sacred in Yorkshire. We have a southern Government representing the fat South. They know nowt about Yorkshire, and if my hon. Friend mentions anything that is good they will tax it.

Mr. Welsh: We must try to educate those in the South. The Government are attacking the poor. Where will it end? When they have taxed bingo and clogs and not brought in the desired revenue, they will have to tax children who walk around in bare feet. The Government will have won then. They will really have attacked the working class.
I am not very old—I do not mind admitting my age; I am over 35—but I have never seen anything that gives people so much pleasure as bingo. Not many people know about the working-class wives like my good mother who achieved happiness by sitting in each other's kitchens and talking. The kitchens were sacrosanct. Men dared not go in.
Those women were bosses in their homes, but they had narrow outlooks and bingo allowed them to get out and meet and talk to others in the village two or three limes a week. It lifted a burden off their shoulders and gave them untold happiness. They got as much pleasure from bingo as Conservative Members would get from dinner at the Savoy and being driven home in a big car at 4 o'clock in the morning.
It is deplorable that the Government should be attacking bingo. They are attacking women who are the salt of the earth. I do not want to insult ladies from the South. I am sure that they are nice people and enjoy their recreation, but the Government's proposal is a blatant attack on those living north of Watford—Labour voters. Political dogma is behind it.
The Chief Secretary is not bothered. He will sleep easy in his cosy bed. He will not need an electric blanket in his centrally heated house. In the North people work hard and play hard. The wives have a terrific amount of fun going to bingo and talking to other wives. The Government will spoil that. If I did not know about what happened at Carcroft, I would not have thought that possible. Six months ago, when the bingo hall in the village closed, I would not have bothered about it. I would not have been aware of it even. Now some of the wives in the village go to the next village, but many stop at home.
The Government could have raised money from other sources. I feel sorry for some people, but I am willing to tax them a little. I do not suppose that my colleagues will ever make me Chancellor of the Exchequer, but one never knows. However, it is doubtful. The Government could raise a great deal of money by taxing people with two swimming pools. If that did not raise enough, why not tax people with one swimming pool? I am willing to pay my share. I would not object to that. I have a bath. A number of years ago we only had a tin bath that used to hang


outside. Due to the local council we have a good council house with a nice bath. I will support the taxing of swimming pools. That is one simple way—

Mr. Golding: Conservative Members would describe their pools as bird baths if a tax was introduced. They would evade the tax in that way.

Mr. Welsh: I am sure that they would. It would have to be written into the legislation that that was not the case and that bird baths could be only six yards by 12 yards. The Government could tax Members of Parliament who have more than one job. That would be very nice. I am trying to obtain money for the Government from sources other than from bingo, so that they can spend £33·7 million every day on arms. That is what it is about. I am trying to think of that. I am trying to help. That would be another way to raise money rather than by imposing taxes on the working class.
I wish to end with a brief statement. Many people who play bingo do so not because they want to win money—I pay for my wife; I do no know whether she wins—but because they want to get away from the four walls that surround them. That is why they go out. It helps to keep them in good health, with a sound mind and able to enjoy their life at home within those four walls cooking dinner for their husbands when they come home from the pit and the kiddies coming home from school. It keeps them on the correct level. That is what bingo is about. It is an important part of the lives of many in the North of England, if not in the South. I am disappointed that a Government with a Prime Minister who happens to be a lady should want to tax bingo when the majority of the players are ladies. I ask the Chancellor to reconsider the proposal. If he wants additional revenue, he should obtain it from a source that does not make bingo players suffer.

Mr. Joseph Ashton: I much enjoyed the speech of my hon. Friend the Member for Don Valley (Mr. Welsh), He brought home to me the story about the MP's wife. Someone asked her "What is it like being an MP's wife?" She replied "I see my husband for only an hour a week, but it soon passes." My hon. Friend brought home to us the problems that Members of Parliament suffer. I criticise the speech of my hon. Friend the Member for Blackburn (Mr. Straw), who spoke from the Opposition Front Bench, because he did not refer directly to the sort of people who are to be punished by the Government and their hard-hearted attitude.
The Royal Commission on gambling went into great detail on bingo clubs. I know that the House will not mind if I quote from it extensively because it is clear that the Chief Secetary to the Treasury has never played bingo in his life. The report stated that the witnesses who appeared before it,
including those who were … critical of the clubs, agreed that they fulfil a valuable social function in relieving loneliness and boredom.
Nearly 85 per cent. of those who play bingo are women. It introduces an element of pleasant diversion into their lives. The report adds that
they were mostly middle aged or elderly, and many of whom are of limited means.
The members of the Royal Commission visited many of the bingo clubs and gained

a generally favourable impression. They provide places where people can meet sociably at very little expense since charges for … play are modest, staking can be kept low, most of the stake money can be … recouped in prizes, refreshments are cheap, and the intervals between play provide plenty of opportunity for chatting with neighbours … the players know each other and are often known to the management.
This part of the social fabric of Britain is what the Government are trying to destroy.
There are nearly 6 million registered bingo players in the clubs. Every day half a million of them turn up to play bingo. What publicity do they get? What mention is there in the papers? If half a million turned up to watch football league we would hear all about it on "Match of the Day" and from Jimmy Hill. There would be talk of transfer fees and there would be three pages in every newspaper every day about football. At Wimbledon, where only about one in 100 of the spectators play tennis, there has only to be some swearing on the court and immediately there are headlines, and a tremendous pressure group is formed. We hear so much about all the middle-class sports and pursuits and all the male-dominated sports. So many interests and hobbies attract massive public interest. Poor old bingo is the exception. That is because it is supported by middle-aged ladies who play bingo so that they may enjoy a pleasant night out. They know exactly how much it will cost them and sometimes they can bring some of their money back with them.
I talked to a lady of about 60 years of age only recently. I asked her why she played bingo and she replied "It is the only place I know where I can have a night out without taking my coat off. I do not have to put my best frock on before I can go." Perhaps the lady to whom I spoke is rather like the wife of my hon. Friend the Member for Don Valley. She told me that she could sit down and relax and talk to her friends. It is a simple, harmless pastime.
Bingo does not have a lobby group to support it. It does not have a trade union with sponsored Members to defend its interests of the sort to which some hon. Members belong. The bingo players do not have expensive lunches provided for them. They are not wined and dined. Unlike MPs, they are not invited to lunch at the Savoy or the Mirabelle restaurant to campaign against the increased tax. That is why we are here. That is what happened.

Mr. Campbell-Savours: My hon. Friend will remember the lobbyists outside the doors of the Committee Room when the Finance Bill was being discussed in Standing Committee.

Mr. Ashton: Exactly. They wanted to know every detail of every clause and every loophole. They became aware of everything that could be used to extract some cash from the taxpayer for their benefit.
When we had the original debate on 20p per gallon on petrol, there was understandably a revolt from the country areas. Pressure was put on the Tory Members of Parliament. I thought for once that the Government would capitulate and at least that it would climb down like my right hon. Friend the Member for Leeds, East (Mr. Healey) did on his petrol tax during the Lib-Lab pact when he wanted to put 5p on petrol but withdrew it because of Back Bench pressure.
However, the Chancellor of the Exchequer did not climb down; he knocked 10p off derv. That was because the lobbyists had put on pressure. All the Conservative Members who are farmers wanted a cut in the derv they used for their tractors, for heating their greenhouses for


commercial use and for their boats and fishing vessels. They got the pay-off. Where are they this morning? There is not a sign of them. Not a single soul is here. They know that they can stick the tax on to the tobacco of the pensioner who smokes a pipe and on to bingo played by middle-aged ladies, many of whom will not know that they are paying extra tax. All that will happen next week is that the jackpot will be reduced from £100 to £90 or the admission fee will go up by 10p in the pound. The cash will have been siphoned away from those silent middle-aged ladies who cause no one any trouble into the hands of the farmers and the landed gentry.
There have been plenty of opportunities to raise the taxes. Let us consider the upper-class pleasures of the last week or two. At Ascot two weeks ago, 3,000 lobsters, 11 cwt of fresh salmon, 1,500 punnets of strawberries and enough caviare to fill the Dispatch Box were consumed. All that went down the throats of the well heeled. At Wimbledon on Saturday some people paid £600 for a centre court ticket. At the same time, nearly 3 million unemployed are having to cause riots in the streets to draw attention to their plight. All the time the only thing that the Government can offer is to tax bingo. What an admission it is that they have to come grovelling and scrambling for £25 million, taking it off the bingo ladies to take 10p off derv and on to the landed gentry.
When did we see the farmers in the dole queue? When did we see them lining up and begging for work? It is about the one section of the community which has not suffered much in the depression. The farmers have perhaps sold a few less potatoes for school dinners and perhaps some of the meat has had to be used for sausages instead of steak, but, generally speaking, they are not doing badly. Therefore, the Government give them a bit more and take it from the people who can afford it least.
The report of the gaming board makes illuminating reading. It is obvious that it has never been read by the Minister. Bingo is not a lottery but a game. It is not gambling on horses. All the stake money goes back to the players. It provides a socially useful function as the big buildings which used to be cinemas, which would otherwise stand derelict with the windows smashed in and would be full of rats and gradually fall into decay, are kept open because a chain such as Mecca organises bingo. The admission fee pays for heating and lighting. There is an 18 per cent. profit, which is not excessive, although it is very nice. There are 1,600 clubs with nearly 6 million members and half a million members playing every day.
The Government pick on that section of the community because those people cannot answer back. They do not have the power of a trade union, they do not get publicity in the newspapers, and they cannot afford to employ experts. That does not apply to Mecca, of course. The tax will not affect it. It will merely pass it on. The players cannot afford to put pressure on the Treasury to make it change its mind.
For two months before the Budget, everyone puts pressure on the Chancellor. A month before the Budget, every hour, on the hour, a civil servant pushes a trolley through his office. The Chancellor looks up, then carries on with his work, and the civil servant goes out of the door. The replies to all the letters read "The Chancellor has seen your submission, and he would like me to say that it is being taken into consideration."

Mr. Austin Mitchell: My hon. Friend is right about the pressure group tactics at Budget time. The only folk who do not get a look-in are the other Cabinet Ministers.

Mr. Ashton: My hon. Friend is right. The Budget proposals are bounced through them. Looking at their faces last Thursday afternoon, I doubt whether they knew anything. It was a shock to everyone, but it did not last. Hon. Members on the Government Benches realised that bingo and one-armed bandits did not affect them. They may go down Curzon Street playing baccarat or blackjack, but they do not go to the miners' institute in my area to play bingo. Conservative Members do not realise the benefits that accrue from bingo. The miners' institutes in my area or in that of my hon. Friend the Member for Don Valley do not make a profit. They do it for the members, particularly the older ones. Every Christmas they hand out cash, bags of coal, turkeys and chickens to pensioners and the disabled. They take the elderly away for trips to the seaside. They take kids on outings. They lay out bowling greens and help pigeon organisations. The profits from bingo at the miners' institutes provide tremendous social amenities, which should come from the rate support grant, which the Government are cutting and thereby denying those amenities. Now they are taxing bingo, and 6 million people will suffer simply because the Government have run out of ideas.
For instance, the Government could consider taxing fox hunting, a tax which would be immensely popular. I guarantee that an opinion poll would show that 98 per cent. of the public would vote to tax fox hunting. Those people can afford the tax. Look what it costs to be a master of hounds. Perhaps a future Labour Chancellor will consider that it would be a popular tax. However, the Government have not considered it, and once again the silent ladies of the bingo will have to cough up.
We must pay attention to the scope of bingo. I declare an interest. I write for the Daily Star. Much of what have said is already in print. The Daily Star discovered that people play bingo and started giving away free bingo cards. Its circulation shot up 50 per cent. in six months because it is a good, sound Labour paper and because it gave away bingo cards. Its circulation was 1 million last Christmas and 1½ million by June. It frightened The Sun so much that it had to introduce big cash prizes to compete. The Daily Star is the one paper that realises the extent of working-class interest in bingo and fights for the working class.
I was fed up last week with Wimbledon, McEnroe, superbrats and all that stuff hour after hour on television and on the radio from two o'clock in the afternoon. It drove people barmy. The same applies to the test match and the world cup. It is saturation. There is no chance of a bingo cup final at Wembley, because if anyone at the back shouted "House" the caller would never hear.

Mr. Austin Mitchell: If anybody shouted "House'', the Secretary of State for the Environment would rush in to cut it.

Mr. Ashton: Or 10 people would run in shouting "Where?" I am wearing myself out making all these jokes, but I seem to be getting no response at all from the Government. However, let us return to those 6 million poor middle-aged ladies.
The way in which the Government have introduced this is disgraceful. The Minister muttered something to the


effect that if the turnover was £1,000 per week people would have to start paying the tax. I hope that he will be probed a great deal more on this, as I think that it would be very easy to dodge the tax. If they paid out £950 and a free washing machine or a portable television instead of £1,000 in cash, would that be covered? Will all these things be taken into account? There are ways and means of dodging every kind of tax. Perhaps bingo should be played only for gifts, as it often is, like the generation game on the television.

Mr. Allen McKay: We could have mobile duty-free bingo played at sea outside the three-mile limit.

Mr. Ashton: My hon. Friend raises great possibilities. Let us consider some of the enterprise zones that the Tories have introduced. I have been to Las Vegas, not because I am gambler. If one keeps away from the gambling, Las Vegas is the finest value for money in the world. One can eat as much superb food as one likes for about $1·50 and see fine entertainers, all run on a form of bingo-type game known as "keno" which is shown on a big board.
We should consider, too, the profits that could be made if bingo were nationalised. Why should Mecca and the rest have the profits? If the Government said that they could use the 18 per cent. profit to build a few hospitals, give a few discounts to pensioners or give cheap or free television licences, that would be a different matter. The BBC might use it to cover licence cuts. For a Front Bench with a bit of initiative, the opportunities are unlimited, but Conservative Front Benchers have no initiative. They just want to slap on the tax, pick up the cash and let someone else do the work and pay out the money.
This is the outcome of switching the tax from derv which began three months ago. An analysis should be made of Budgets and how changes take place and taxes are switched. There is an old saying in my part of the world, "If at first you don't succeed, cry louder". That is what happens here. The ones who yell the most tend to get what they are after. We saw it all the way in the last Budget. The farmers on the Conservative side, most of whom never declare their interest, just stand up and say that the derv tax will bankrupt the farmers. I can never understand why members of the Cabinet are allowed to have farms. There was a rule at one time that a member of the Cabinet could not hold stocks or shares, could not have an outside job and could not have any kind of interest. This never applies to farmers. About 11 of the present Cabinet members have farms. If they were men of principle, every one of them would have abstained from voting on the reduction of derv duty. They are not actually here tonight, of course. They are all paired and in bed. Those 11 rich farm-owning members of the Cabinet have knocked lop off derv and taken it from the old ladies in my constituency who toddle down to the bingo hall for their one little bit of pleasure.
It is time we got the bingo vote organised. Six million is about half the Conservative vote at the last election. Many bingo players voted Tory last time. The Government are attacking the working-class Tories again. They will get their comeuppance in Warrington. No doubt Mr. Stan Sorell is going round all the bingo halls in Warrington saying what is happening to taxes and how the Conservatives have cut them, kept their promises and delivered what they said they would deliver. In fact, they have not cut anything; they have switched the taxes on to

such items as school dinners, bingo, bus fares, rents and rates—everything that bites on the working class. They have kept the taxes away from their nine or ten farmer friends in the Cabinet who have done very well out of being in the Government.
My hon. Friends should oppose the motion as strongly as they can, because it is an imposition on the poorest, weakest part of the working class. It has been badly handled, badly done, and we should resist it all the way.

Mr. Don Dixon: The first time I played what was then called tombola was on a troopship coming from the Middle East. It was very popular in the Navy and on the troopships.
I agree with my hon. Friends who have said that what is proposed is another tax on the poor. The Tories do not cut taxes; they switch them from direct to indirect taxation. The motion is another part of the policy. It can be described as Robin Hood in reverse—robbing the poor to give to the rich.
People who go to bingo halls are working-class men and women and old-age pensioners. One does not have to hire a top hat or tails to go to bingo halls, or wear floppy hats as women do at some of the racecourses, such as Ascot. Those who play bingo are miners' wives, not millionaires' wives; shipbuilders' wives, not shipowners' wives. The motion will hit the people who have been hit since 1979, when the present Government were elected.
Old-age pensioners go to bingo halls for company. You know, Mr. Deputy Speaker, because you come from our area, that bingo is very popular there. For many people, going to bingo is a social occasion. They go not to gamble but to meet their friends, possibly once a week. It is a social service. We have heard about the Secretary of State for the Environment cutting back on local government expenditure. The motion will hit the pensioners, because if they cannot go to bingo regularly the local authority will have to provide more home helps and other visitors to the elderly.
Some people have already been hit by the fact that this Government changed the Social Security Act 1975 under which old-age pensions were to rise in line with prices or wages, whichever were higher. The first thing that the Government did was to do away with that indexation. Moreover, because they miscalculated by 1 per cent., the Government also decided that those old-age pensioners who will be hit by a tax on bingo would get 1 per cent. of their pensions clawed back this November.
We should not forget that many handicapped people play bingo. In this International Year of Disabled People, this Government are taxing bingo, a game greatly enjoyed by disabled people.
Other people who play bingo and occupy their minds doing so are the unemployed. The only pleasure that many unemployed people get in the week is to go to the bingo hall or the working men's club and play bingo with their wives. Where I live we have the highest regional percentage of unemployment in the country. There are areas in the North and North-East where there is a tremendous amount of hidden unemployment. But conditions have changed since before the war. When the Jarrow march took place in the 1930s, unemployed people were to be seen standing about on street corners, and their pleasure in those days was to go to the pit heap to play pitch and toss. I do not know whether my hon. Friends


know the game. Pennies are tossed into the air, and people gamble in a very small way on the result. That was one of the enjoyments before the war when we had mass unemployment, much as we do today.
We had much the same philosophy from the Government at that time. It was the philosophy of the open market and free competition. But if we talk about competition it must be said that this motion also shows the inconsistency of the Government, because they are attacking working men's clubs which, in the North, have been instrumental in keeping down beer prices because of the competition which they represent to the private breweries. The motion again will hit working men's clubs and the people who frequent them.
My hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) spoke about illegal bookmaking during the debate on the previous motion. This motion will give rise to illegal bingo games, because people will not go to places where they have to pay tax. They will go to private houses and small halls to play bingo illegally. Illegal bookmaking was very common when I was a youngster. Down the back lane there was always a bookmaker. It used to be illegal on an almost official basis. The police knew that a bookmaker was in a certain back lane. They had a list, and the bookmakers knew when they were due to be copped and fined. That is just what will happen to bingo. There will be illegal bingo playing.
The Government will achieve nothing by this motion, but they will be consistent with what they have done since they were elected. This motion will switch taxes; it will not cut taxes. It is totally wrong to suggest that the Government have cut taxes. All that they have done is to switch taxes. There is more tax revenue collected now than there was when this Government were elected.
When Conservatives go round Warrington or wherever telling the people who were misguided enough to vote for them in 1979 that they will cut taxes and open up competition, I hope that electors will realise that this proposal does precisely the opposite. It increases taxation by switching it to people who cannot afford to pay it—the people who have been hit by every piece of legislation introduced by this Government. Last year, we had two Social Security Acts. This year they introduced a Bill to claw back 1 per cent. of the old-age pension in November. They propose to take 24p and 37p off old-age pensioners this November because of a miscalculation last year. At the same time, they will be taxing the only bit of pleasure that old-age pensioners have.
This is what we are getting from the present Government. But it is nothing new, and I am surprised that anyone should suggest that their proposal tonight is any different from what they have come up with since they were elected in 1979. Unemployment has gone up. In my constituency it has increased tremendously. I shall not discuss percentages, because nothing annoys me more than to hear people talking about unemployment in percentage terms. I have been unemployed on numerous occasions for long periods. It is not so long ago that I was unemployed and signing the book. One is so trusted that the pencil that one signs the book with is tied to the book with a length of string so that one and a half inches of pencil is not stolen. That is the sort of trust that one receives.
I do not give percentages when I am talking about the unemployed, because if one is unemployed one is 100 per cent. unemployed. It is no consolation to have the

employment officer tap one on the shoulder and say "I have good news for you. This week you are one of only 12 per cent., whereas last week you were one of 13 per cent.". Unemployment has increased tremendously because of the Government's attitude to trade unions. They were under the impression that trade unions were far too powerful, so, since 1979, they have systematically—

Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. The hon. Gentleman must confine his remarks to bingo duty.

Mr. Dixon: I have strayed slightly, Mr. Deputy Speaker, but many trade unionists play bingo and that is their only pleasure during the week. Many trade unionists frequent working men's clubs, which will be affected by the tax.
I accept that I have digressed slightly in speaking about unemployment, but it is important because the unemployed will be affected by the unnecessary tax being introduced tonight. The amount of tax we shall raise is nothing compared with the amount we shall spend. On Wednesday we shall be discussing the expenditure of £5,000 million on Trident missiles, whereas now we are talking about taking £25 million to £35 million in tax from people who cannot afford it and who go to bingo for company and for an evening out.
I hope that the Government will have second thoughts, although I know that they will not. The Opposition must oppose the measures. The motion on bingo is the worst of the motions. It will hit the old-age pensioners, the sick, the handicapped and the unemployed. It is alarming that hon. Members on the Conservative Benches have not been here for a considerable time, but my hon. Friends have sat here all night and have participated in serious debate. It is not a case of trying to waste time, because since I was elected to the House I have never joined the word club—never use one word when six will do.
My right hon. and hon. Friends have spoken from the heart and have said things that required saying. My hon. Friend the Member for Bassetlaw (Mr. Ashton) mentioned lobbies. There is no lobby for these people. We have had no circular but we have had letters and other correspondence on virtually every issue but this. No one has circulated me. I do not know whether my hon. Friends have had deputations or circulars.
At the weekend I was at the constituency of my hon. Friend the Member for Ogmore (Mr. Powell). On Saturday afternoon, after the successful unemployment demonstration in Cardiff, we went to the picture hall in Nant-y-Moel. If it had not been for the local authority taking the initiative and changing that theatre to a place where old-age pensioners and various clubs could play bingo, that hall would have been like the hall that I passed. One day, after floods, the hall collapsed and it lay empty for a considerable time. As my hon. Friend the Member for Bassetlaw said, many of the cinemas have remained, but the youngsters would have gone in and broken the windows and so on. This hall is not like that. I do not remember the name of the village, but my hon. Friend the Member for Ogmore knows it.

Mr. Ray Powell: Ogmore Vale.

Mr. Dixon: The building had collapsed. It had remained in that state for quite sortie time. Had that


building been taken over by someone for a friendly game of bingo, it would have been maintained. It would now be standing and would not be in its present derelict state.
It is important that local communities should take over buildings such as that so that they may be maintained in reasonable order and used to give pleasure to people who want to attend, mark their numbers and shout "House" when they have the correct numbers on their cards.
At one time everyone said that bingo was on the wane. I thought that bingo was a phase that would pass. The only time when it seemed people wanted to play the game was when I played it on a troopship in the Mediterranean because there was nothing else to do. But bingo has caught on. Indeed, its popularity has increased. Virtually every national newspaper now features bingo, as does every local newspaper. At one time, people turned to the back page of a newspaper to have a look at the racing results. Now they look at the bingo numbers, get out their bingo cards and mark them each day.
That is why it is wrong for the Government to introduce this sort of tax, which hits ordinary working-class people who do not ask for a great deal. That is fortunate: I am surprised that they do not ask for more. They seem to be quite happy as long as they can have a pint and a game of bingo. They do not go out looking for aggro. I am not suggesting that each time we read about a regressive policy introduced by the Government we should fill the sandbags and hump our rifles over the top.
There is no doubt that the time will come when the British people will not be prepared to accept the sort of legislation that the Government have introduced time and again. Eventually people will say "Enough is enough. We shall not accept any more of this sort of taxation." This motion seeks to raise a tiny amount of revenue compared with total revenue. The Government have introduced these motions, yet they do not even know whether the revenue will be raised. If they had any sense at all, and before introducing such measures, they would sort out the dispute with the civil servants. I recently read in a newspaper that about £3,500 million has not been collected because of the Civil Service dispute.

Mr. Campbell-Savours: It is more than that.

Mr. Dixon: I accept that, but it is now more than a week since I saw that figure mentioned in the newspaper. At that time, the uncollected revenue because of the dispute was estimated to be £3,500 million. If the Government want to raise money, all they have to do tomorrow is to get the civil servants round the table and settle the dispute. Then immediately the income will come in. They will be getting in the income tax and the VAT that has not been collected since the beginning of the dispute many weeks ago.
That is how the Government should get revenue, and not by hitting miners' wives, shipbuilders' wives, old-age pensioners, the handicapped, the sick and the unemployed, who like to have a modest game of bingo. As I have said, if the Government want revenue, they can get it easily tomorrow by settling the Civil Service dispute. That is what they should be doing, instead of bringing in regressive legislation which is hitting the people whom we represent—and, incidentally, hitting the very people from whom the Tory Government claim that they got their votes at the general election. The Tories claim to have received

3 million working-class votes at the last general election. They have got to get a considerable proportion of the working-class vote, because it is the majority. The only way that that vote can be gained is by conning the working class.
But the people now recognise that they have been misled by the Government. The people of Warrington will not be fooled. They have seen what the Government have been doing for the last two years. Therefore, they have an advantage over all the other constituencies which voted in 1979. I have no doubt that the people of Warrington will take note of the legislation that the Government have put through since 1979.
I hope that my hon. Friends will force a Division. I hope that Conservative Members will go back to their constituencies and visit the bingo halls. Incidentally, they are very fond of doing it during an election. It is impossible then to get into a bingo hall, because every working men's club secretary is inundated with requests from Tory candidates to appear at the clubs and bingo halls. But I have no doubt that none of them will be going back this weekend to tell the people at the bingo halls and the working men's clubs that the Government have increased the tax from 7½ per cent. to 10 per cent. in order to get back part of the money that they have given to farmers by reason of lowering the taxation on derv by 10p.
I hope that some of my hon. Friends will also be able to make their constituency points in the debate.

Mr. D. N. Campbell-Savours: The House will be indebted to at least two of the speakers in the debate tonight, particularly my hon. Friend the Member for Don Valley (Mr. Welsh), who very effectively put the case for hundreds of thousands, if not millions, of working men and women. Many of us would find it difficult to put the case as effectively as he put it. As my hon. Friend was talking, I was thinking of people in my own working men's clubs. Although they will not be directed affected by the legislation as it stands, we are informed that the Minister is further considering their position. Perhaps at a later stage some form of legislative change will be introduced affecting them.
I was thinking of people in my constituency who will not be aware of what the Government have done in the Budget and who were deceived by the Conservatives at the time of the last general election when they went to the country with the simple proposition that, if a Conservative Government were elected, taxes would be reduced. We have found, over the last two years, that this was a lie. It was a lie perpetrated up and down the country by Conservative candidates who deceived people into voting for a Government who recognised, privately, that they would have to increase taxation to pay for the programme that they planned.

Mr. Austin Mitchell: What my hon. Friend says is correct. Will he not accept that in this situation one tax leads to another? Before the House tonight are two tawdry proposals, each depending on the other. If the Government are to increase the tax on bingo, they will have to try, as a sop to aggrieved bingo hall proprietors, to extend the taxation to games in licensed clubs and other premises that are not covered. One silly tax leads to an even sillier tax.

Mr. Campbell-Savours: My hon. Friend is correct. The Government have only to be reminded of areas that


may exist into which they can introduce taxation and they will seize them eagerly. They have to pay the bills that stem from the failure of their economic policy. Hon. Members who were committed at the time of the last election not to increase taxation are now looking desperately for areas where they can apply new taxes.
Many hon. Members feel a sense of despair that a number of debates should have been truncated by the Government, who were embarrassed by the arguments of my hon. Friends. If only the debates could have been transmitted nationally on television, even in a truncated form, or on radio, they would have grieved many people. It is sad that very little of the debates will be heard by our constituents, including those of the Chief Secretary to the Treasury, who represents a constituency in the Northern region. Many of his constituents will be bingo players, smokers or those who enjoy gaming in one form or another. They will never be aware of the statements made by the right hon. and learned Gentleman about their activities in this debate.

Mr. Mitchell: It is worth making the point that, because of the insulting and contemptuous manner in which the Chief Whip moved the closure, only four hon. Members were able to contribute to an extremely important debate on taxation of betting, on which many of my hon. Friends have strong feelings.

Mr. Campbell-Savours: Considering the time provided in Committee and the fact that the Government are introducing changes involving a great deal of revenue, one would have thought that hon. Members would at least have been given the opportunity to participate in greater numbers. Many millions of pounds will be voted to the Government tonight. That money will not have been subject to the full scrutiny of the House. It will have been subject to a reply to an oral question on the Floor of the House last week and a debate in which many hon. Members will not be able to participate due to legislation before the House tonight which, I understand, incenses people to an even greater extent. I refer to the Lords amendments to the British Telecommunications Bill, to which, my hon. Friends inform me, very great exception—

Mr. Deputy Speaker: Order. The hon. Gentleman is being led astray. He should be discussing the bingo duty.

Mr. Campbell-Savours: I shall return directly to the subject of bingo duty. Conservative Members are probably dotted all over the Palace of Westminster, in chairs or in flats within the Division Bell area, hoping that the Bell is long delayed. By agreement with the Chief Whip, a number of Tory Members were permitted—and I use that word advisedly—to vote against the tobacco measure. Does the same apply to bingo duty?
It is significant that whenever sensitive debates take place Government Whips allow Conservative Members to vote against the Government—but they are always hon. Members with marginal seats. The record of Tory Members who have been allowed to break their Whip and vote against the Government shows that they are from marginal seats and able to go back to their constituencies, in a blaze of publicity, to make out that they have held their own Government to ransom and threatened them with defeat.
That does not deceive us, although many hon. Members are unaware of such activities. The local press in marginal constituencies makes it clear that agreement has been reached with the Whips.

Mr. Straw: That is certainly true in North-East Lancashire. The same hon. Members who go in for token votes against the Government give their full-hearted support to the Government's main economic and social policies. In censure debates they are with the Government.

Mr. Campbell-Savours: In the last two years Government Members have voted against the Government and then gone back to their constituencies to deceive their constituents about their real endeavours.

Mr. Cunliffe: Will my hon. Friend give way?

Mr. Deputy Speaker: I hope that the hon. Gentleman will refer to bingo and not pursue the divergence.

Mr. Cunliffe: I shall follow your guidance, Mr. Deputy Speaker. My hon. Friend the Member for Blackburn (Mr. Straw) mentioned peculiarities arising out of the habits developed by North-East Lancashire Members. Hundreds of thousands of textile women workers are regular devotees of bingo.

Mr. Campbell-Savours: I spent some time living in Lancashire before I was blessed with the opportunity of living in Workington. Many textile and shoe workers in the Rossendale Valley, where I lived, and in Bury and Bolton enjoy bingo.
The Chief Secretary referred scathingly to a reference by the Shadow Chancellor of the Exchequer who talked of the response that we made to the statement by the Chancellor of the Exchequer the other day. The Chief Secretary implied that it was irresponsible of us to suggest that fine tuning of the economy was not in order, but he grossly misunderstood the subtle but important point that we have been making. As the Government overshot the PSBR target by £4½ billion last year, it seems incredible that they should seek to redress a revenue shortfall of about £80 million this year. If the Government were willing to overshoot by so much last year, why is it so important to redress the imbalance caused by the Conservative Back-Bench revolt over the tax on derv? The Government's proposal is a gross over-reaction, following last year's gross under-reaction.
The Chancellor of the Exchequer is preoccupied with the PSBR. The right hon. Member for Sidcup (Mr. Heath) has tried to explain to the Government that the effects on the economy of an obsessive belief in monetary targets and the need to define a precise PSBR may unsettle the social fabric of the nation. Leaving aside the bitterness that stems from demonstrations such as those at Brixton, Southall and Toxteth and the difficulties in people's relationship with the forces of law and order in inner cities, one can say that the demonstrations of recent weeks stem from the Government's lack of flexibility. They must show flexibility and realise that they cannot pursue their monetarist strategy obsessively, because it will unsettle the economy and the social fabric and may bring down the Government.
I do not believe that Governments should be brought down by social anxiety and demonstrations in the streets. The Opposition are committed to parliamentary democracy, but that can survive only if the Government are willing to respond to the needs of the nation. When


dogma is put before flexibility, our commitment to democratic principles may have to give way to something that none of us wishes to see.
The Minister has failed to understand how vindictive the bingo duty is towards the large numbers affected by it. I do not play bingo. I have never enjoyed watching it being played. However, I understand that a large number of people get a great deal of enjoyment from it. When listening to my hon. Friends' comments and the comments of those who play bingo, one senses that the Government—perhaps because of the construction of Conservative men and women—fail to understand the importance of bingo in working-class culture.
It is hard to put the case as well as some hon. Members have in the debate tonight. The Chief Secretary, who hides behind his pieces of paper, would have done well to have listened closely to the comments—

Mr. Golding: Does my hon. Friend realise how wise he is, as a Member of Parliament, not to play bingo in his constituency? While losing may cause some discomfort, the fear of shouting "House" when visiting a club as a stranger is so great as not to be undertaken by most mortals.

Mr. Campbell-Savours: My hon. Friend takes me further down a certain route. In the main, constituents of Labour Members will pick up the bill. Yet Conservative Members set off the rebellion on derv. I wonder whether Conservative Members, many in the marginal seats, who caused their Whips such great difficulty were aware that their constituents would have to pick up the bill. Many Conservative Members in marginal seats were under intense pressure from industries in their constituencies. Our constituents are being asked to pay the price.
We presume that the suggested increase was a political decision and not simply Treasury officials putting forward a series of options. Either the Financial Secretary or the Chief Secretary must have gone to the Chancellor with options, perhaps calculated in the same way as the Prime Ministers of the early sixties used to make calculations that led to the then Budget strategy. Were the Government fully aware of the impact on the constituents of Conservative Members in the marginal seats?
Conservative Members were subject to pressure from industries in their constituencies. When they came to the Chief Secretary to ask for changes on derv, did they make suggestions about where the revenue could be raised? We have had a number of interventions from the hon. Member for Knutsford (Mr. Bruce-Gardyne), who suggested that in part the revenue could be raised from gaming duties. He did not refer specifically either to increased duty on tobacco tax or on bingo. Perhaps he deliberately avoided doing so. Perhaps other suggestions were made by Conservative Members who were supporting the rebellion. Perhaps the Chief Secretary will say what other suggestions were made. We are entitled to know what thoughts went through the Government's mind. It might help the debate considerably if we knew what other options were open to us.
The reduction of the increased duty on derv led to the series of increases set out on the Order Paper and was most important to the national economy. Despite that reduction taking place, the total cost to industry of the Government's tax increase on derv exceeded the total value of the energy

package that was introduced by the Secretary of State for Energy earlier this year. I do not know whether the right hon. and learned Gentleman was aware of that.
There has been considerable comment in the Northern region about this factor. It may be that in the South the overall effect of the increased duty on derv announced in the Budget, which was reduced, and the concessions contained in the energy package led to an overall benefit for companies. However, that was not the position in the Northern region. The majority of companies in the North have to pay higher costs for the distribution of their products than do companies in the South. The effect of the energy package was insufficient to cover the additional costs.
When the right hon. and learned Gentleman next discusses these matters with the Secretary of State for Energy, I hope that he will ensure that his right hon. Friend is made more aware than I was able to make him of the extra costs to which industry in the North has been subjected. The right hon. and learned Gentleman represents a Northern constituency, as does the Government Chief Whip. We feel that the case of industry in the North is not being put adequately and is not understood by the Government.
The effect of the increased duty on bingo is to penalize many of our constituents. I draw the attention of the House to the comments of an executive of Mecca Ltd., one of the large national bingo hall operators. He said that the increase in the duty on bingo
does not come from us but from the Ordinary person's winnings. Mr. Barry Anderson, the operations director of Mecca Social Clubs, said, 'People only have so much to spend. Takings at bingo halls had already been dipping in line with the recession'".
He added that winnings, which could be between £200 and £2,000 at the clubs, were still an important part of what was now a full evening's entertainment offered by Mecca. The provisions mean that anyone who once took home £100 in winnings will get only £90 this month.
It is not only my right hon. and hon. Friends who are drawing attention to the dilemma that faces our constituents. It is being done by those in the industry. They understand fully the effect of these measures because they are able to gauge the national downturn in bingo activity. The right hon. and learned Gentleman is showing great insensitivity to the nature of bingo clubs, certainly as Mr. Anderson of Mecca would inform us and as has been described by a number of my hon. Friends.
Bingo clubs and organisations in many of our constituencies and places where people play bingo are centres of social activity. For many people they are the only place where they can go during the week and meet other people without spending vast sums of money. They cut back the loneliness and anxiety which comes about particularly during this period of unemployment and recession. For many elderly people particularly, they are of great importance. I am sure that the constituency of the Chief Secretary is the same as my constituency, where there are a number of those clubs and organisations which attract people not only for the purposes of extracting money from them but to provide them with a service. In many ways, bingo organisations operate as a social service—

Mr. Allen McKay: My constituency is a vast rural area of about 140 to 150 square miles. There are many urban authorities in the area, which is fair enough. The rural areas are being attacked in a way because most of the


people's entertainment comes from the village halls, the bingo halls and such places. What the Conservatives have forgotten is that when it comes to the next general election the people who vote and who usually go to bingo will remember exactly the taxes which were put on. Will my hon. Friend take into consideration the international aspect of the matter? If the Chief Secretary were to visit Malta and visit Marsaslock, he would realise that Dom Mintoff, rather than taxing bingo, encourages it. He would find out that on two days a week—

Mr. Deputy Speaker: Order. That is a long intervention. I think that the hon. Member has made his point.

Mr. McKay: I shall finish that point. The Chief Secretary will find that Dom Mintoff encourages bingo. On two days a week the whole village takes part in bingo. That is part of Dorn Mintoff's strategy for helping him in his elections.

Mr. Campbell-Savours: My hon. Friend has drawn attention to the importance of bingo in the social life of many communities, as have many Opposition speakers. I do not know what happens in Malta, but I presume that it is for the same reasons that Dom Mintoff takes such action. It is to promote social activity. Those clubs are of vital importance to the community because in many ways they offer the social services and the organisation for them which would otherwise be provided by the State or voluntary organisations where those services do not exist.
In my constituency—I am sure that it is the same in the Chief Secretary's constituency—those organisations arrange trips for people to visit the holiday resorts of Morecambe and Blackpool, coach trips round the Lake District and to Scotland and coach and train trips to London. Those are all activities which are based on the local social club.
The social club is able to provide for itself, keep itself liquid and create the profits necessary to fund those social activities by the use of bingo. Therefore, in many ways bingo is a way of raising revenue in certain communities to provide for the social services which otherwise would have been provided by the State under a more amenable Government.

Mr. Golding: My hon. Friend has not said why the Government are so antagonistic. Is it perhaps because when the caller shouts "Number Ten, Maggie's Den", the howls of derision and opposition which come straight from the people have been observed by the Government, and the Government are determined to make certain that the people do not get adequate opportunities, as they now do, when the call "Number Ten, Maggie's Den" is shouted, to show their outright opposition to the Prime Minister and her Government?

Mr. Campbell-Savours: My hon. Friend wishes to know why I believe the Government have picked on those people. It is simple. When a Conservative looks for sources to fund concessions for the more privileged in conditions of falling revenue and output and a collapsing economy and recession, he turns to those who can ill afford to pay. Successive Conservative Governments would have done the same had they found themselves in a corner.
This is only the beginning. Next year the Government will have to come back again with deflationary proposals.

Mr. Cook: At Question Time.

Mr. Campbell-Savours: Yes. Last week a mini-Budget was introduced through an answer to an oral question to avoid the embarrassment of a mini-Budget statement, which, in fact, it was.
Next year the Government will have to extract from the taxpayer further money to fund the PSBR, which will again overshoot, as unemployment rises beyond the Government's assumptions, thus further exhausting the pool of money for supplementary and unemployment benefits and inflating the PSBR. It is a vicious, nasty, sordid little circle. Year after year, the Government will have to come back to the House to extract money from those who can ill afford it.
I wish that the Warrington by-election were on 16 July 1982. By that time the Government's ineptness and inability to tackle fundamental problems will be even more apparent. It would not be a question of only a lost deposit. No votes at all would be cast for the Government.
I asked the Chancellor last week why the Government had sought to increase taxes on bingo instead of increasing taxes on the better off by withdrawing the capital transfer tax concessions. He replied:
It is difficult to understand why changes that have been described as 'trivial' by the Opposition spokesman on economic affairs should provoke such dramatic wrath from the hon. Gentleman.
I was not alone in objecting. My hon. Friends gasped in astonishment at the Chancellor's statement. He went on to say, referring to me:
He should understand that changes in capital transfer tax—reversing some of the measures introduced by the previous Government—form an equally important part of our policies for promoting enterprise and economic activity."—[Official Report, 2 July 1981; Vol. 7, c. 1009.]
When we were putting alternatives to the bingo, gaming, general betting and tobacco duty increases in the first debate, the Chief Secretary made some rather flippant comments about the cost of the capital transfer tax concessions. Yet we are told by the Chancellor that they are part of a policy to promote enterprise and economic activity. I wish to ask the Chief Secretary a simple question requiring a simple answer. Can he tell me, a simple soul, how the allocation of a concession on capital transfer tax to a landlord and owner of land who does not work it in any way increases enterprise, and how that, as an act of fiscal change by the Government, can influence economic activity? That was the Chancellor's justification for introducing these major concessions on capital transfer tax If the Chancellor will not answer the question. will the Chief Secretary try to do so?
No one who knows what happened in Committee on the Finance Bill and who understands the level of concessions made by the Government over the past few years on capital gains tax and capital transfer tax can understand what the link is between those concessions and the promotion of enterprise and economic activity. The right hon. and learned Gentleman might even intervene at this point, particularly as we were promoting the principle of withdrawing those concessions, to explain what the link is and the reasoning behind the concessions. I see that once again the right hon. and learned Gentleman shows no willingness or desire to come to the Dispatch Box and defend the Government's actions.
My hon. Friend the Member for Blackburn (Mr. Straw) earlier very illustratively drew attention to some of the concessions. I wish to refer directly only to those concessions which have incensed me so much—

Mr. George Foulkes (South Aryshire): And me.

Mr. Campbell-Savours: —and, indeed, my hon. Friend—and of which we have been informed in Committee, namely, the concessions on captal gains tax. I was a member of the Committee last year, too, when the concessions included the exempt slice of £3,000 for individuals and £1,500 for trustees. That cost the Treasury £65 million last year. We are told that by the financial year 1982 that will reduce to £25 million. The cumulative effect must therefore be about £110 million or £115 million over the years mentioned.
There is also the roll-over relief for lifetime gifts—

Mr. Deputy Speaker: Order. The hon. Gentleman must relate what he is saying to the motion, which is on bingo duty.

Mr. Campbell-Savours: This matter is at the heart of our case, Mr. Deputy Speaker. We are saying that bingo duty, which imposes and additional burden on our constituents in working-class communities in the Northern region, could have been offset—

Mr. Golding: We are speaking not only for the Northern region but for working people everywhere in the country. This cannot be a parochial debate. We cannot confine it to the Northern region. It is important there, but it is also important in the West Midlands, the North-West and throughout the United Kingdom.

Mr. Deputy Speaker: The hon. Member for Workington (Mr. Campbell-Savours) must relate what he is saying to the bingo duty. He must not go into detail on the other matters that he has raised.

Mr. Campbell-Savours: I take the point of my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) about the need to refer to the wider problem. I often visit the Potteries, and I know that many people in my hon. Friend's constituency are equally affected.
It is only fair that hon. Members should be able to refer to individual concessions under capital transfer tax and capital gains tax that have been given to the better-off and have been paid for by raising additional revenue from bingo duty and taxes.
I should have thought that it would have been in order to refer to the capital transfer tax threshold increase introduced in last year's Finance Bill, at a cost of £125 million, and to the further capital transfer tax increase in exemption limit for charitable gifts last year, with a value of £5 million to the better-off. They will all benefit from last year's tax concession, and their benefits will be paid for out of the additional revenue raised as a result of the introduction of a higher tax on bingo.
The value of the concessions in last year's Finance Bill totalled about £200 million, to which we must add the additional revenues that are to be spent by the Chancellor on giving concessions this year. Let us take the capital gains tax settled property rules, including roll-over relief—

Mr. Mawby: This has nothing to do with the tax on bingo.

Mr. Deputy Speaker: Order. The Chair will decide whether an hon. Member is in or out of order.

Mr. Campbell-Savours: The hon. Member for Totnes (Mr. Mawby) will no doubt take note of your comments, Mr. Deputy Speaker. It is for the Chair to decide when I am out of order.
I do not know whether the hon. Gentleman will be one of those who will gain from other concessions in this year's Finance Bill. He may wish to intervene to tell me whether he may gain from the capital transfer tax or the capital gains tax provisions.

Mr. Deputy Speaker: Order. The hon. Member for Totnes (Mr. Mawby) will indicate his wish to intervene if he gets to his feet.

Mr. Campbell-Savours: If the hon. Gentleman indicated that he was likely to gain from these concessions on capital transfer tax and capital gains tax, I should have to tell him that we and our constituents who as a result of this motion will have to pay a higher rate of bingo duty will be paying for the concession from which he may benefit.

Mr. Foulkes: Does my hon. Friend recall that, in the Standing Committee on the Finance Bill we saw Conservative Members rise again and again declaring their interests in petroleum companies, property companies and the like and then moving amendments designed to benefit the interests which they were representing? Is not that why, understandably, my hon. Friend is giving Government supporters the opportunity to declare their interests and show how they will benefit from the other provisions in the Finance Bill while poor old-age pensioners will have to pay for their benefits by way of the increased bingo duty?

Mr. Campbell-Savours: My hon. Friend makes an important point which led to considerable controversy during our proceedings on the Bill. At the same time as we were being required to approve additional taxation and to waive an additional tax concession, which is what the Rooker-Wise amendment would have meant this year because it would have increased the threshold and produced a concession for a great number of our constituents, it was significant that Conservative members of the Committee kept jumping to their feet to move amendments at considerable cost to the Exchequer.
There was one occasion during our proceedings, following the intervention of an hon. Member who is not present at the moment—I do not know whether he intends to be here to vote at the end of this debate—when some of us went to the Library to dig out Andrew Roth's book on Members' interests. Whilst we were studying the book, we discovered that one hon. Member was a director of a company which he said during our proceedings on the Finance Bill would not benefit directly as a result of the amendment that he was moving. He misled the Committee, because the company had benefited. The company is the London and Scottish—[Interruption.] Well, I have tried to show some courtesy. The hon. Member concerned is not here. If he was here, I should refer directly to him and give him the opportunity to defend himself. The point that we made on that occasion was never answered during the Committee stage. We made a substantial accusation based on Library documentation. The name of that hon. Member was


included on the board of directors of a company which was a minor shareholder in a company which itself had sent a brief to hon. Members.

Mr. Golding: This is very interesting, but is it not possible for my hon. Friend to spell out some of the implications for the bingo player? He tells us constantly that the bingo player will pay more tax. That may not be so. Many may be forced to give up bingo, and many others will be forced to cut down from, say, two tickets to one ticket. Is my hon. Friend aware of the impact that this will have on those who produce bingo tickets, those who produce the felt pens for marking bingo cards, those who produce the general machinery for bingo and those who run the general administration of bingo—

Mr. Deputy Speaker: Order. The hon. Member for Newcastle-under-Lyme (Mr. Golding) has made his point.

Mr. Campbell-Savours: My hon. Friend asked me an important question which begs an answer. I shall do my best to answer him.
While I have been sitting here listening to the interesting contributions of my hon. Friends, I have taken time to study some documents about the effect of the increase in bingo duty that took place last year. Perhaps my hon. Friend the Member for Blackburn will tell me if I am wrong. I recall that a similar increase took place last year in the Finance Bill when we were required to pass additional taxation for bingo. That had some effect on the incidence of bingo-playing nationally.

Mr. Straw: Before the last Budget, the duty was 5 per cent. It was increased to 7½ per cent. in the last Budget. Now it is 10 per cent. Thus it has doubled in the space of 15 months.

Mr. Welsh: That is disgraceful.

Mr. Campbell-Savours: I do not want to dispute that with my hon. Friend, but I thought that the increase was 66⅔ per cent. Perhaps my mathematics are not as good as my hon. Friend's mathematics. I did not know that duty had doubled since the election of the Government, but I bow to the wisdom of my hon. Friend, who is a Front Bech spokesman and specialises in these matters. I am sure he will tell me if he discovers that he is wrong. My hon. Friend the Member for Newcastle-under-Lyme asked me about the effect on our constituents. I wish that my constituents and his constituents could read the figures that I have here about where the duty that will be raised as a result of the measure will go.
I do not suppose that "The Financial Statement and Budget Report 1981–82" would make good reading in the bingo clubs nationally, because many people would find the Red Book, as it is called, boring material. Furthermore, not many bingo clubs could afford to pay the £4·40 that this small booklet—which, if I am not mistaken, has only 48 pages—costs. That means that each page, allowing two pages per sheet must cost about 20p, excluding the cover. Our constituent bingo players would have to pay that if they wanted to see the document. They would be interested, if they were to purchase it, to read how much had been given in concessions in the Budget this year.
In this year's Budget, capital gains tax—

Mr. Foulkes: Will my hon. Friend comment on the inflation that has taken place since 1970? Then a similar publication produced by Her Majesty's Stationery Office

contained a similar number of pages and cost 3s. 6d. That will make many hanker for the old days. That is an amazing increase and illustrates the sort of inflation that has taken place in 11 years.

Mr. Campbell-Savours: If that booklet cost 17½p 10 years ago and this book costs £4·40, we must assume that the price has risen 30 times in 10 years. I cannot believe that a 30-fold increase in the cost of a publication such as that stems from natural price increases.
Could it not be that the Government are now so desperate for revenue that they are using their own publications as a means of raising revenue to pay off the substantial PSBR problem that they have generated as a result of their negligence in the management of the economy?
I was referring to the capital gains tax concession in this year's Budget which my bingo-playing constituents and those of my hon. Friends will have to pay. The capital gains tax forecast for a full year on settled property rules, including roll-over relief, will be £15 million. That is what our people are required to pay by way of this increase in bingo duty.
The capital transfer tax rules have been changed and have caused much anger among Labour Members during the last six weeks. My hon. Friends will recall a private meeting we had upstairs about seven weeks ago at the beginning of our evaluation of the Budget strategy. At that time I indicated that CTT was at the heart of the Bill. I said that what the Bill did was disgusting and that there was a duty upon us to ensure that during its proceedings, as a result of which our constituents would be required to pick up the bill, we should do everything we could to draw the nation's attention to the major concessions that have been made.

Mr. Woolmer: I am sorry that I missed the substantial part of my hon. Friend's remarks. Has he ascertained from the Government exactly how much revenue this measure will bring in? As I understand my hon. Friend's argument, the Government will collect a few pence from every bingo book in order to transfer money to the richest people so that they do not have to pay taxation on the transfer of fortunes. Is that the burden of my hon. Friend's remarks? What justification have the Government given for taking money from bingo players to pay to people who have fortunes of £500,000?

Mr. Campbell-Savours: My hon. Friend makes an important point. Indeed, during the Finance Bill Committee, my hon. Friend tried to extract from the Government the reason why our people were required to pick up the bill for the excesses of the Government. All these questions remain unanswered. The Chief Secretary refuses to be drawn. I have invited him on two occasions to indicate why our bingo-playing constituents must pick up the bill for the Government's economic madness.
I was elected by 54,000 people. I have spent all night awaiting the opportunity to debate this highly important matter, and I have tried to draw the Chief Secretary to the Dispatch Box to answer the question that my constituents may well ask me. Why are the Government trying to impose this burden on our constituents who play bingo?

Mr. Golding: Has my hon. Friend yet referred to the Cabinet millionaires and discussed this question against the background of the massive wealth owned by members of the Cabinet who have taken this decision?

Mr. Campbell-Savours: During the Committee stage of the Finance Bill on the Floor of the House, my hon. Friend the Member for Blackburn made some interesting comments on this matter. My memory is not in the most excellent state at this early hour of the morning, but I think that my hon. Friend cited the example of the Prime Minister and her husband and the tax concessions that they would gain as a result of the Government's strategy.
I cannot remember—perhaps my hon. Friend the Member for Blackburn would like to refresh my memory—the extent to which they were said to be gaining. I know that it was a substantial amount of money. But if my hon. Friend sought to intervene he would do well to comment on those substantial benefits for the Prime Minister's family, in the light of the increases that are about to be imposed upon us in the event that the motion on bingo duty gets the approval of the House. It is the increased Treasury take on bingo duty that is paying for the concessions which the Prime Minister and her husband will gain as a result of the Budget strategy.
From the reports in the newspapers it is worth noting that the Prime Minister's family is alleged to be worth several million pounds. If that is the case, surely it is wrong—indeed, it is immoral—that our constituents who play bingo should be required to pick up the bill in order to fund a concession to those people who, with all respect—I show them no antagonism—are in a better placed position in society to deal with the considerable economic difficulties that must arise in the present circumstances.

The Parliamentary Secretary to the Treasury (Mr. Michael Jopling): rose in his place and claimed to move, That the Question be now put.

Question put, That the Question be now put—

The House proceeded to a Division.

Mr. Campbell-Savours: (seated and covered): On a point of order, Mr. Deputy Speaker. I recall that the last time I saw this hat worn in the Chamber it was by you, on a point of order, about one and a half years ago. I take great exception—as, indeed, will all my hon. Friends—to the decision by the Chief Whip again to foreclose the debate.
My point of order relates to the fact that many of my hon. Friends who wished to intervene had indicated to me during the course of my speech that they wished to do so. They included my hon. Friends the Members for Newcastle-under-Lyme, for South Ayrshire (Mr. Foulkes), for Grimsby (Mr. Mitchell) and for Redcar (Mr. Tin), my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) and, as all hon. Members in the Chamber will have noticed, my hon. Friend the Member for Blackburn. My hon. Friend the Member for Edinburgh, Central (Mr. Cook) had turned round, and my hon. Friend the Member for Jarrow (Mr. Dixon) had also indicated to me that he wished to intervene and to ask questions.

Mr. Deputy Speaker: I do not disagree with anything that the hon. Gentleman has said. My job is not to think only about those hon. Members who want to speak. I have to decide whether there has been adequate discussion. It is for the occupant of the Chair to decide whether to accept the closure motion. That is what he must consider. That is what I tried to do.

The House having divided: Ayes 121, Noes 19.

Division No. 251]
[6.30 am


AYES


Alexander, Richard
MacGregor, John


Ancram, Michael
MacKay, John (Argyll)


Baker, Kenneth(St.M'bone)
Major, John


Baker, Nicholas (N Dorset)
Marlow, Tony


Banks, Robert
Marshall, Michael (Arundel)


Beaumont-Dark, Anthony
Mather, Carol


Benyon, W. (Buckingham)
Maude, Rt Hon Sir Angus


Berry, Hon Anthony
Mawby, Ray


Best, Keith
Maxwell-Hyslop, Robin


Biggs-Davison, John
Mellor, David


Blackburn, John
Meyer, Sir Anthony


Bottomley, Peter (W'wich W)
Miller, Hal (B'grove)


Boyson, Dr Rhodes
Mills, Iain (Meriden)


Braine, Sir Bernard
Moate, Roger


Bright, Graham
Morgan, Geraint


Brinton, Tim
Morrison, Hon P. (Chester)


Brittan, Leon
Neale, Gerrard


Brooke, Hon Peter
Neubert, Michael


Brown, Michael(Brigg &amp; Sc'n)
Newton, Tony


Browne, John (Winchester)
Onslow, Cranley


Bruce-Gardyne, John
Osborn, John


Bulmer, Esmond
Page, John (Harrow, West)


Butcher, John
Page, Rt Hon Sir G. (Crosby)


Cadbury, Jocelyn
Page, Richard (SW Herts)


Carlisle, John (Luton West)
Pattie, Geoffrey


Carlisle, Kenneth (Lincoln)
Proctor, K. Harvey


Clark, Hon A. (Plym'th, S'n)
Rees, Peter (Dover and Deal)


Clarke, Kenneth (Rushcliffe)
Renton, Tim


Clegg, Sir Walter
Roberts, M. (Cardiff NW)


Colvin, Michael
Roberts, Wyn (Conway)


Cope, John
Sainsbury, Hon Timothy


Cranborne, Viscount
Shaw, Giles (Pudsey)


Douglas-Hamilton, Lord J.
Silvester, Fred


Dover, Denshore
Skeet, T. H. H.


Dunn, Robert (Dartford)
Speed, Keith


Emery, Peter
Speller, Tony


Fairgrieve, Russell
Spicer, Jim (West Dorset)


Faith, Mrs Sheila
Stainton, Keith


Fenner, Mrs Peggy
Stanbrook, Ivor


Fletcher-Cooke, Sir Charles
Stevens, Martin


Fookes, Miss Janet
Stradling Thomas, J.


Gardiner, George (Reigate)
Taylor, Teddy (S'end E)


Garel-Jones, Tristan
Thomas, Rt Hon Peter


Goodlad, Alastair
Thompson, Donald


Gow, Ian
Thorne, Neil (Ilford South)


Griffiths, E.(B'ySt. Edm'ds)
Trippier, David


Griffiths, Peter (Portsm'th N)
Viggers, Peter


Grist, Ian
Waddington, David


Hamilton, Hon A.
Wakeham, John


Hawkins, Paul
Waldegrave, Hon William


Hawksley, Warren
Walker, B. (Perth)


Heddle, John
Waller, Gary


Henderson, Barry
Watson, John


Hogg, Hon Douglas (Gr'th'm)
Wells, Bowen


Hunt, David (Wirral)
Wheeler, John


Jopling, Rt Hon Michael
Wickenden, Keith


Kershaw, Anthony
Williams, D.(Montgomery)


Lang, Ian
Wolfson, Mark


Le Marchant, Spencer



Lester, Jim (Beeston)
Tellers for the Ayes:


Lloyd, Peter (Fareham)
Mr. Selwyn Gummer and


Lyell, Nicholas
Mr. Robert Boscawen.


Macfarlane, Neil





NOES


Campbell-Savours, Dale
Mitchell, Austin (Grimsby)


Cocks, Rt Hon M. (B'stol S)
Powell, Raymond (Ogmore)


Cowans, Harry
Sheldon, Rt Hon R.


Cryer, Bob
Skinner, Dennis


Cunliffe, Lawrence
Straw, Jack


Cunningham, Dr J. (W'h'n)
Welsh, Michael


Dixon, Donald
Woolmer, Kenneth


Foulkes, George



Golding, John
Tellers for the Noes:


Harrison, Rt Hon Walter
Mr. James Tin and


Haynes, Frank
Mr. Allen McKay.


Mikardo, Ian

Question accordingly agreed to.

Question put accordingly:—

The House divided: Ayes 106, Noes 19.

Division No. 252]
[6.40 am


AYES


Alexander, Richard
Griffiths, Peter (Portsm'th N)


Ancram, Michael
Grist, Ian


Baker, Nicholas (N Dorset)
Hamilton, Hon A.


Banks, Robert
Hawkins, Paul


Beaumont-Dark, Anthony
Hawksley, Warren


Benyon, W. (Buckingham)
Heddle, John


Berry, Hon Anthony
Henderson, Barry


Biggs-Davison, John
Hogg, Hon Douglas (Gr'th'm)


Blackburn, John
Jopling, Rt Hon Michael


Boscawen, Hon Robert
Kershaw, Anthony


Boyson, Dr Rhodes
Lang, Ian


Braine, Sir Bernard
Le Marchant, Spencer


Bright, Graham
Lester, Jim (Beeston)


Brinton, Tim
Lloyd, Peter (Fareham)


Brittan, Leon
Lyell, Nicholas


Brooke, Hon Peter
Macfarlane, Neil


Brown, Michael(Brigg &amp; Sc'n)
MacGregor, John


Browne, John (Winchester)
Major, John


Bruce-Gardyne, John
Marlow, Tony


Butcher, John
Maude, Rt Hon Sir Angus


Carlisle, John (Luton West)
Mawby, Ray


Carlisle, Kenneth (Lincoln)
Maxwell-Hyslop, Robin


Clark, Hon A. (Plym'th, S'n)
Mellor, David


Clarke, Kenneth (Rushcliffe)
Meyer, Sir Anthony


Colvin, Michael
Miller, Hal (B'grove)


Cope, John
Mills, Iain (Meriden)


Cranborne, Viscount
Moate, Roger


Dover, Denshore
Morgan, Geraint


Dunn, Robert (Dartford)
Neale, Gerrard


Fairgrieve, Russell
Neubert, Michael


Faith, Mrs Sheila
Newton, Tony


Fenner, Mrs Peggy
Onslow, Cranley


Fletcher-Cooke, Sir Charles
Osborn, John


Fookes, Miss Janet
Page, John (Harrow, West)


Gardiner, George (Reigate)
Page, Rt Hon Sir G. (Crosby)


Garel-Jones, Tristan
Page, Richard (SW Herts)


Goodlad, Alastair
Pattie, Geoffrey


Griffiths, E.(B'y St. Edm'ds)
Proctor, K. Harvey





Rees, Peter (Dover and Deal)
Thorne, Neil (Ilford South)


Renton, Tim
Trippier, David


Roberts, M. (Cardiff NW)
Viggers, Peter


Roberts, Wyn (Conway)
Waddington, David


Sainsbury, Hon Timothy
Wakeham, John


Shaw, Giles (Pudsey)
Walker, B. (Perth)


Silvester, Fred
Waller, Gary


Skeet, T. H. H.
Watson, John


Speed, Keith
Wells, Bowen


Speller, Tony
Wheeler, John


Spicer, Jim (West Dorset)
Wickenden, Keith


Stainton, Keith
Williams, D.(Montgomery)


Stanbrook, Ivor
Wolfson, Mark


Stevens, Martin



Stradling Thomas, J.
Tellers for the Ayes:


Taylor, Teddy (S'end E)
Mr. Selwyn Gummer and


Thomas, Rt Hon Peter
Mr. Donald Thompson




NOES


Campbell-Savours, Dale
Mitchell, Austin (Grimsby)


Cocks, Rt Hon M. (B'stol S)
Powell, Raymond (Ogmore)


Cowans, Harry
Sheldon, Rt Hon R.


Cryer, Bob
Skinner, Dennis


Cunliffe, Lawrence
Straw, Jack


Cunningham, Dr J. (W'h'n)
Welsh, Michael


Dixon, Donald
Woolmer, Kenneth


Foulkes, George



Golding, John
Tellers for the Noes:


Harrison, Rt Hon Walter
Mr. James Tin and


Haynes, Frank
Mr. Allen McKay.


Mikardo, Ian

Question accordingly agreed to.

Resolved,
That, as from 27 July 1981, section 17(2) of the Betting and Gaming Duties Act 1972 shall have effect—

(a) with the substitution for '7½ per cent.' (in both places) of '10 per cent.';
(b) with the substitution for 'three thirty-sevenths' of 'one-ninth'.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

WAYS AND MEANS

Gaming Machine Licence Duty

The Chief Secretary to the Treasury (Mr. Leon Brittan): I beg to move,
That increases shall be made in the rates of gaming machine licence duty chargeable under section 21 of the Betting and Gaming Duties Act 1972 and Part V of the Miscellaneous Transferred Excise Duties Act (Northern Ireland) 1972.
I shall not trouble the House with the general argument about the importance or desirability of the recoupment, still less about the nature of the Budget strategy. Even if Labour Members think that the desirability of the Budget strategy has changed between the date of the Budget and last night, I do not think that they will suggest that its desirability has changed significantly between last night and this morning.
This is the final motion dealing with the proposed changes in gaming and betting duties in the measures that my right hon. and learned Friend the Chancellor of the Exchequer announced to the House last week. The new rates of duty are as follows. In premises with local authority approval there will be a change from £20 to £25 for the lower rate for 2p machines. For the higher-rate—namely, 5p and lop machines—there will be a change from £25 to £60 for the 5p machines and from £100 to £120 for the 10p machines. In premises without local authority approval the lower rate for 2p machines—

Mr. D.N. Campbell-Savours: rose—

Mr. Brittan: —will increase from £50 to £75. For higher-rate 5p machines there will be an increase from £100 to £200. Subsequent machines will remain at the existing figure of £200.

Mr. Austin Mitchell: House!

Mr. Brittan: No. This is a different motion. The hon. Gentleman is confused at this hour in the morning.

Mr. Mitchell: Jackpot!

Mr. Brittan: That is much more appropriate. For peak rate for 10p machines there will be an increase from £300 to £400. These are changes that will be proposed by way of amendment to the Finance Bill.

Mr. Robert Sheldon: We are dealing with the last of the four Ways and Means motions. The motion before us deals with the gaming machine licence duty. I tabled a question last Thursday to seek to ascertain the revenue to be raised from each of these duties. I went further, because I thought that it would be right to know the revenue raised from each of the various duties that were to be discussed today. We were able to make a fairly good guess at most of the duties, but it is not possible to make a guess at the various duties on gaming machines.
My question appears on the Order Paper on page 3318. I refer to written question 172, which was a priority question for Monday 6 July:
To ask Mr. Chancellor of the Exchequer, what is the amount of revenue which will be raised for each of the 13 individual increases in the duties as set out in Press Notice 684, 2nd July 1981, paragraph 3 of the Notes to Editors.
The 13 increases include, most importantly and relevantly for this debate, the various gaming machine licence duties

The press notice contains six licences for which we wanted to know the expected revenue as a result of the increases. The Chancellor of the Exchequer replied:
I shall let the right hon. Member have a reply as soon as possible.
That is unacceptable. We are here today to discover how much is being raised, to comment on that, and to discuss and debate the matter. When the office of the Chief Secretary or one of the Treasury Ministers was informed that that information was required, I was told to table a written question and I would receive the answer. The written question was tabled not only because of our rights but because of our duty and obligation to discover how much our constituents will have to pay as a result of the Ways and Means resolutions. We do not know, as we do not have the answer.
I should have thought that the obvious thing to do was to adjourn the debate until the Chief Secretary comes up with an answer and lets us have it, so that we can consider the matters before we debate them. However, we do not yet have the answer, which is scandalous.

Mr. Campbell-Savours: My right hon. Friend raises an interesting point. There have been a number of debates over the last four or five months when hon. Members including myself have increasingly been receiving that form of reply. Every month I put down a series of questions to the Department of Employment. I noticed yesterday that for the first time I received a series of answers similar to that which my right hon. Friend received. All my hon. Friends should express great anxiety about that interesting development. It means that, invariably, hon. Members come into the Chamber without all the material necessary to ensure an informed judgment and an informed vote—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. An intervention should be short.

Mr. Campbell-Savours: I shall complete my intervention by saying—

Mr. Deputy Speaker: I believe that the hon. Member has had ample time for his intervention.

Mr. Sheldon: My hon. Friend has said that this is not an uncommon situation. He is right in saying that the numbers of such holding replies have increased out of all proportion over the past year or so. However, this is one of a different kind. It followed a telephone conversation with the office of one of the Treasury Ministers—

Mr. John Golding: Will my right hon. Friend give way?

Mr. Sheldon: May I finish? Then I shall be happy to give way to my hon. Friend.
My question was intended to obtain information for today's debate, which might have been given in a press notice or in some other way in advance of the debate. I thought that it was an omission that should be remedied. That seems to be the view of Treasury Ministers. I accepted that. The Chief Secretary is to reply to the debate. Presumably he had been informed of the question that I put down. If he had been informed, I should have thought that the first thing that he would have done on rising to his feet was to put the matter right by giving, even belatedly, the figures for the revenue cost.
Perhaps the Minister of State is now walking in with those figures. If that is so, I shall be happy to give way


to the right hon. and learned Gentleman so that the position is made clear. It is bad, even if the Chief Secretary has the figures, that we have not had time to look at them in advance so that we can consider them, assess what is being given and decide for ourselves how those matters should be conducted. Even without that notice, I hope that the right hon. and learned Member will now give the figures.

Mr. Brittan: I apologise to the right hon. Gentleman. There appears to have been a misunderstanding. [Interruption.] If the hon. Member for Workington (Mr. Campbell-Savours) is seriously interested in the answer, he should listen, but if he is interested only in screaming abuse from a sedentary position the House will draw its own conclusions as to his bona fides.
I have here an answer which I believed was in the right hon. Gentleman's hands. If it is not, I am sorry. On the 1981–82 figures, for cigarettes it is £60 million; for cigars, hand-rolling tobacco and other smoking and chewing tobacco, £5 million; for off-course betting, £8 million; bingo £5 million, and gaming machine licences £7 million. The estimates have not been further subdivided.
I know that the right hon. Gentleman will take it from me that it was anticipated, intended and expected that that answer would have been in his hands before the debate. However, I am sure that he will accept that the broad division is not in any way surprising and merely gives some slight further detail to the general picture presented both by my right hon. and learned Friend on Thursday and by myself earlier in the debate.

Mr. Sheldon: I am grateful to the right hon. and learned Gentleman for that reply, but only a few hours ago I picked up the holding reply that I read to the House, and it is strange that the further information was available before I received that reply. It is more than a slip-up. It is incomprehensible.

Mr. Campbell-Savours: Sinister.

Mr. Sheldon: Perhaps when the right hon. and learned Gentleman returns to his office he will find out why things happened in that way. This is not the first time, although this is the most important occasion.
The right hon. and learned Gentleman said that the figure to cover the various licences was £7 million. The absence of a breakdown is an unhappy precedent. We are dealing with different kinds of machines. We should distinguish between 1p machines, which are chargeable at the lower rate, and the more expensive sort. We should know how much revenue is attributable to each, so that we are aware of how many machines at the top end of the range will pay £400 per machine and how many will pay £25 at the lower end. The scale is not 10 per cent., more or less. The duty on one machine may be 16 times that on another.
The Chief Secretary has come to the debate singularly ill prepared. I was generous about the botch-up over the reply. We are dealing with revenue matters, which should not be treated lightly. It should not come as a surprise that we want the information. The right hon. and learned Gentleman should be better prepared. We are talking about extracting money from people's pockets, and we shall diligently exercise our right to know the different amounts that will have to be paid. We should be failing in our duty if we did not do that.

Mr. Golding: Can my hon. Friend tell me where the 1p machine fits in? We have figures for 2p, 5p and 10p machines. Is there a tax on 1p machines?

Mr. Sheldon: There used to be 1p machines, and colloquially they are still sometimes referred to in that way. Such is inflation under the present Government, however, that the lower limit has now doubled to 2p per play, but I shall deal with that more fully later.
I am sorry that we do not have the kind of breakdown that I should dearly have wished to use, if only to see the effect of the increases in taxation on the number of machines and to analyse, categorise and compare the amounts of revenue to be raised from different areas. There may be a profitable area which could be examined further to obtain more revenue from some of the more expensive machines, or the contrary may be the case. We simply have not the information to make a decision or a judgment on that. We can say only that £7 million is to be obtained from this area. Whether the amounts are right as between one end and the other is not a matter on which we can express an opinion. None of us has the information to express an opinion, let alone a judgment, and still less make a decision on how we envisage this will work in practice.
The gaming machines that we are discussing are largely slot-machine gambling games. Perhaps I may delineate some of the types. Slot-machine gambling has extended considerably, and there are many newer forms, as my hon. Friend the Member for South Ayrshire (Mr. Foulkes), with his great expertise in these matters, will no doubt inform the House in due course.
The Gaming Board does not deal with the problems of either the manufacture or the importation of these machines, although it has expressed its interest and concern in, and its desire to have some kind of control over, these areas of the industry's activities.
First, these are essentially games of chance, rather than being rigged, although that may come as a surprise to some of my hon. Friends. They are supposed to be strictly games of chance. Secondly, they must take coins or tokens which can be purchased from the club or amusement arcade or whatever it may be. A number of them give prizes, while others are purely for amusement only and there is no monetary or other reward. At best, they might simply return the money that the player has placed in the machine. That category includes the space invaders and things of that kind.

Mr. Golding: My right hon. Friend seems to believe that these are just games of chance. Many of the machines now installed in clubs are not merely games of chance. Experience, judgment, mathematical knowledge and an understanding of the theory of probability must inevitably be possessed by anyone who is successfully and knowingly to play on many of these machines. One cannot go on a nudge without a great deal of knowledge.

Mr. Sheldon: I note what my hon. Friend says. I have not had the pleasure of playing some of the new machines. It follows that I have not lost any money on them, as my hon. Friend the Member for South Ayrshire may have done.
I was weaned away from gaming machines at an early age. When I was about 10 I went into an amusement arcade. I was on holiday, which is why I had what was for me the substantial sum of 6d. I exchanged my 6d coin for


six pennies, placed one in a machine, and won an extra penny. That seemed a wonderful way of increasing my capital. I decided that I was on to a good thing. Every hon. Member present knows the conclusion, but it was not known to a 10-year-old. Within minutes I had nothing.
That was one of the best investments that I ever made, because any gambling instinct that I might have had went completely. Apart from the occasional game of cards in which money is of little relevance, at least as I play it, gambling has not formed part of my basic character. I believe that I owe that largely to that incident at an early stage in my life. For many other people, it does not work like that. So we see in the amusement arcades the embryonic person like myself starting to acquire an interest and dedication that I was fortunate enough to avoid.
I take my hon. Friend's point that some of the newer machines require a certain kind of skill, though I would not put it as high as he did. There is possibly adaptability to new ideas. There may be a quick reaction. But I look forward to acquiring more understanding of the machines, which I have only glanced at in a motorway cafe.

Mr. Golding: I must protest at the lack of knowledge of those on the Opposition Front Bench. They can be commended for their esoteric knowledge of economics and economic affairs, but I appeal to my right hon. Friend, when he returns to his constituency, to obtain some professional advice on these matters. He will find that it takes him a considerable time to master the machines in question. He is underrating the skill needed to perform on the machines to their full potential.

Mr. Sheldon: I must bow to my hon. Friend's knowledge, because he has some and I have none. I cannot continue what is a one-sided argument. It may be that the position is as he says.

Mr. Lawrence Cunliffe: I share the concern of my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding). We are not talking about ingenious systems in the so-called game of chance. There is now a degree of simple sophistication. It is like the economy: it is a stop-go system. There is a simple technique of freezing the numbers. One cannot accurately guess what will happen, but a simple mathematical calculation at least makes the game not entirely dependent on chance. In the interests of private enterprise, and because I am a fair-minded man, I cannot divulge the calculation.
Our insight is based not on experience but on constituents telling us about these matters and having us view the machines. I am certain that after this debate my right hon. Friend will have constituents at his surgery enhancing his knowledge. I appreciate the first-class job done tonight by my hon. Friend the Member for Newcastle-under-Lyme and other hon. Friends in educating our Front Bench spokesmen.

Mr. Sheldon: I am always surprised by the range of knowledge present and available in the House, and my hon. Friend is right to draw my attention to it. Again I must confess my lack of knowledge in comparison with that which he has acquired.
We are dealing with a number of different types of machine, the first of wich are the jackpot machines. These

are to be found on various premises, including licensed casinos, bingo clubs, unlicensed clubs, miners' welfare institutes, and so on. In 1978 the total number of jackpot machines in use was less than 30,000 and they were mostly fruit machines—as they are now, very largely, but they are much more sophisticated—and by 1980 the figure had increased to about 37,000. They produce substantial sums of money for those fortunate enough to put in their money at the right time and do the right things with the handles, stoppers, or whatever they have.
Then we have the amusements with prizes, and these are to be found largely in fairgrounds, amusement arcades, pubs, cafes, especially transport cafes, where they are a very common feature, and shops. These amounted to a total of about 80,000 in 1978. By 1980 the number had increased to about 106,000. That represents a substantial number of machines in use at present.
The third category are machines for amusement purposes only. Those are to be found in fairgrounds, amusement arcades, piers, and so on, and they include pin-table machines, which were very common at the time that the Royal Commission was taking evidence but which are not quite as common today. There are much more sophisticated forms of amusement about which I hope to have my understanding broadened by the contributions of my hon. Friends.
For all these machines, there is a specialised repair and upkeep service. It requires a good deal of skill, because a machine that is taking money to be able to pay up to £400, which is the levy now being charged upon them, obviously will lose substantial sums of money if it is not in working order. A machine that is used 365 days a year will cost more than £1 a day, quite apart from the cost of the machine itself, which can be large, and, novelty being important in the gaming machine industry, the life of a machine in a prime site obviously is limited. In time, of course, they go to less attractive sites which have less rent to pay and which are less used. But they have only a limited period of life, so it is essential to keep them in proper repair.

Mr. Brittan: The right hon. Gentleman obviously has been able to get figures and, therefore, has not been operating on a substantially false basis. However, it might be convenient to remind him that the numbers of machines in the different categories are published in the annual Customs and Excise reports and therefore are available. But, for the record, the figures that the right hon. Gentleman quoted are not substantially inaccurate. The AWP machines at the lower rate totalled 4,600 in 1980, which is the latest year for which figures are available. The higher rate figure is 180,300. The jackpot machines are to be found in clubs and so on. At the lowest rate there are 100, at the higher rate 19,300 and at the peak rate 21,400.

Mr. Sheldon: I am grateful to the right hon. and learned Gentleman for those figures. They fill in some of the picture. We shall not have the opportunity at this late stage in the debate to work out the implications. If we had been given those figures before, we might have been able to work out how they affected different types of amusement arcades or places where these machines are to be found and to study the implications. I accept that we shall be dealing with such matters in the Finance Bill when we debate these amendments, and we shall then have a further opportunity for discussion.
I hope that the right hon. and learned Gentleman, the Treasury, his Department and his office will ensure that in future the sort of information that we require, for which we apply, is catered for more seriously than it has been in the past. I am grateful to the right hon. and learned Gentleman for those figures.
I was considering the repair and upkeep of these machines, which is a specialised business because of the speed of change and construction of the machines as well as the need to keep them in full working order.
I understand that in the initial stages 90 per cent. of the jackpot machines were not owned by the firms that had possession of them but were obtained on a hire and maintenance basis. There was an important change, because a number of consequences arose from it. On the other hand, the amusement arcades tended to buy such machines outright. We need to examine a number of factors concerning those machines that were bought outright and those that were taken in on a hire and maintenance basis.
I shall first deal with the astonishing change in the nature of this industry, in which, as recently as 1961, 95 per cent. of the machines in use in this country were imported. That situation has been reversed, and 95 per cent. of the machines are now manufactured in the United Kingdom. Thus, from being almost entirely an imported business we are now almost a home-based industry.

Mr. Campbell-Savours: Why is that?

Mr. Sheldon: My hon. Friend asks why that happened. I am sorry that I do not have the information. It is clearly a lucrative—

Mr. Speaker: Order. The right hon. Gentleman should address the House, not his hon. Friend.

Mr. Sheldon: My apologies, Mr. Speaker. We have been through a very long night and some of the strictest rules of order have lapsed during your absence. I am grateful to you for recalling us to the stern duties and obligations that we always have to you, Mr. Speaker, and the position that you hold.
Thus, we have changed from being essentially a foreign-based industry to being a home-based industry. About 95 per cent. of the machines now in use are purchased from United Kingdom manufacturers.
It is a highly profitable business, and I return to my original point about the large numbers that were originally taken by shops, clubs and premises on hire and maintenance. It being a highly profitable business, there was a danger that a criminal element would latch on to it, and that happened. A number of protection rackets forced club proprietors to install some of the machines on profit-sharing terms. One of the advantages of having the Gaming Board is that it can effectively reduce that and, in many cases, cut out this wholly undesirable pressure on clubs and other establishments to take the machines and give the owners a large share of the profits.
The remedy was certification of the suppliers by the Gaming Board, which effectively removed this menace, which was becoming quite serious, and there was a ban on profit-sharing arrangements.
I understand that the Gaming Board wants certification to be extended to all manufacturers, importers and converters of machines. At present its powers extend to certification just for retailers and those who maintain the

machines. I am not in a position to judge how important these further developments might be, although I take note of them. The board has the power to ensure that those concerned with these machines are fit and proper persons. There are also Gaming Board inspectors.
In order to be fair to those who make use of these machines, we believe that the true rate of return should be known. In exchange for the large sums of money that the Treasury will now obtain from the levies, we also want to see a true rate of return. It has been suggested that each machine should state the rate of return—75 per cent., 65 per cent., or whatever. Those who think that the law applying to consumers should not stop at gaming machines would surely wish to see that development so that the person playing the machines has some understanding of what takes place.
There are 170,000 machines in operation in the country as a whole. There has been a large increase in the number of video games, and the duties vary considerably. Premises with local authority approval, including pubs, arcades, and so on, are chargeable at the lower rate for machines that charge up to 2p per play. The present tax on such machines of £20 a year will be increased to £25 a year. Machines that charge more than 2p per play are at present taxed at the rate of £25 for the first machine and £100 for subsequent machines. The tax will now rise to £60 for the first machine and £120 for the subsequent machines.
Then there are premises without local authority approval—licensed or registered clubs. We frequently see these machines in such clubs and sometimes we take part in the play. The tax on machines charging up to 2p per play will now be increased from £50 to £75. Machines that charge between 2p and up to 5p per play will now be taxed at the rate of £200 instead of £100 for the first machine and £200 for subsequent machines. That brings us to the peak machines that I have mentioned previously, the tax on which will be increased from £300 to £400 per machine.
The right hon. and learned Gentleman has given some of the figures. There are still a number of gaps that we shall wish to see filled before the Report stage of the Finance Bill when these matters will be further discussed. At any rate, we are aware of some of the figures and we shall need time to digest them.
It is a pity that we did not have the figures before. However, I am not sure whether the right hon. and learned Gentleman has the balance right between all these various machines. Although we still maintain our opposition to the revenue aspects of this matter and the way in which taxation is being reduced for the frivolous purpose of meeting the targets set three months or more ago, we would need to be satisfied that the right balance has been struck between the various machines that we are discussing.

Mr. K. J. Woolmer: Has my right hon. Friend thought of the balance of effect on, for example, working men's clubs which are already being hit by a substantial increase in the price of beer? There is also the effect on fruit machines, quite apart from the general economic recession. Many hon. Members may not appreciate the value of the clubs and the role they play in their local communities. Does my right hon. Friend agree that the overall effect of these factors on the working men's clubs and the various other clubs around the country will be very considerable, and that it will damage one


aspect of community life at a time when the clubs are among the few places to which people can go for cheap enjoyment?

Mr. Sheldon: My hon. Friend has given an important reason for needing to know the various rates of duty so that we can make the kind of calculation that he has in mind. If we had those rates of duty, we would be able to see how the working men's clubs had fared with problems such as the increase in the price of beer and the recession in general. Obviously, the calculations cannot be made quickly, and some consideration will be needed in order to make the assessment, which I am sure my hon. Friend would wish to see.

Mr. Campbell-Savours: Would my right hon. Friend comment on the way in which the tax is levied? Does not he think that it would be better if the tax could be raised on the amount of money that is put into a machine as against a general levy on an individual machine, particularly if the authorities are able to devise some system whereby the history of a machine can be monitored by way of technologically advanced apparatus being fitted to the machine, and to which the Revenue would have access? Would it not provide in certain circumstances for a greater take on certain machines which are located in areas where they are likely to be in receipt of larger amounts of money?

Mr. Sheldon: My hon. Friend deals with technical aspects of these machines which may arise, but what he suggests would lead to a considerable rewriting of the legislation, going much beyond what we are now discussing. But I am sure that the technological aspects of some of the newer machines will be surprising if they develop in these kinds of way. If that is so, obviously a more enlghtened Administration than the one we now have might want to look at them in a fundamentally different way. I look forward to that coming, but clearly the revenue aspects must always lag some time behind the technological changes.

Mr. Woolmer: It is the case, is it not, that these machines in clubs pay VAT on at least their net take, hence large revenue earners pay proportionately in addition to this form of taxation? At a time of inflation that is, as it were, an additional take out of those revenue earnings. I draw my right hon. Friend's attention to it, unless he thinks that the point is not covered to some degree already.

Mr. Sheldon: My hon. Friend is right. There is value added tax to be taken into account, but when one looks at the operations of working men's clubs it seems that the taxation is never ending. They have pay-as-you-earn gaming machines, VAT and beer duties to consider. They are chock-a-block with returns to be made to the Revenue.

Mr. Ray Powell: The Customs and Excise collects 15 per cent. VAT on all fruit machines. Most clubs record the income and the outgoings of the machines. The tax on fruit machines has increased by 100 per cent. in two years of Tory Government. A licensing fee increase will mean a further substantial amount for a club committee to find.

Mr. Sheldon: That is true. Even before the increase, the sum was not inconsiderable. The increase will present a number of problems. Some clubs may have made no

provision for the increase on the reasonable assumption that an increase had not figured in Budget discussions and that it was not to be found in the Finance Bill. They are not accustomed to wholly new taxation appearing in the month of July. This is very much an innovation and one that the Opposition do not wish to see repeated.

Mr. Campbell-Savours: I have already discussed a new form of revenue-raising to test the Government's reaction. Is it not significant that my hon. Friends were quickly on their feet to knock on the head any such principle? Hon Members have always been led to believe that Conservative Governments will not consider new forms of taxation. Yet my hon. Friends are now fearful that the Government should even be aware of new forms of raising taxation in case the argument that they need the money produces a further oral reply that could lead to another mini-Budget.

Mr. Sheldon: My hon. Friend has expanded our horizons. A debate on much of what hon. Members may have wished to discuss will not be possible because the information came to the House too late. There will be a chance for discussion on the Report stage of the Finance Bill, but it is a pity that the opportunity did not arise on the Ways and Means resolutions.

Mr. Golding: Will my right hon. Friend explain more fully those matters that hon. Members will not be able to discuss? I should have thought, following the speech of the Chief Secretary, that it would be possible to discuss these matters. What information do we lack in order to discuss them?

Mr. Sheldon: It is possible that if I had a few moments to spare, a pencil and a calculator, I would be able to make use of the figures that the Chief Secretary gave. If the information is complete—I cannot be certain about that because there has not been the opportunity to study it—one might be able to draw all the relevant conclusions. On the other hand, it might not be possible. I am certainly not in a position, standing at the Dispatch Box, to undertake complex calculations.
We should like to know the implications for the different machines. Where will the increase come from? Will it come from the big, medium or small machines, or from the machines in working men's clubs, the arcades or at the end of the pier? We should be able to make an assessment from the information given tardily by the Chief Secretary. However, I am prevented from coming to any conclusions.

Mr. Brittan: The right hon. Gentleman is making heavy weather of the matter. I do not want to rub it in, but, as a former Treasury Minister, he will be aware that the information which he claims that he cannot digest has not been dug up especially for him. It is published in the annual Customs and Excise report.

Mr. Sheldon: The Chief Secretary is not in a position to rub anything in. We asked him legitimate questions with plenty of time to spare and we did not receive the answers. The Chief Secretary should show proper humility. He has failed to give the House the information requested. We want the information to be supplied in a written reply. We want no arrogance from the right hon. and learned Gentleman. A proper sense of humility would be in order. Even then we might be less than amenable.

Mr. Golding: I can understand my right hon. Friend's sense of outrage and indignation at the Chief Secretary. However, if he had spent more of his youth on the nudge-and-hold machines his mathematics might be quicker. Perhaps my right hon. Friend should acquire practical experience.

Mr. Sheldon: I am afraid that I have left it too late to be able to acquire the skills and talents best learnt in one's youth. There comes a time when one realises the limits to one's skills. One then leaves it to others to show up one's defects.
We look forward to examining the figures which we hope will be supplied in a written reply. I hope that we shall he able to fill the gaps in our understanding about where the taxes will be levied, who will suffer the most and who will suffer the least. Will the people who suffer be those whom we wish to be affected most? We hope to come to a rational and sensible conclusion about how effective the operation has been.
In spite of their lack of information, my hon. Friends have discussed the matter more deeply than the Chief Secretary, who has adopted a cavalier attitude to the motions. He has dismissed them in a few sentences, apart from what he said in the first debate. The comprehension of my hon. Friends will surely convince him that what he has done is less adequate than that which my hon. Friends and myself have done and what they will do when the information is to hand.

Mr. George Foulkes: I listened to the helpful introduction to the debate of my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon). I realise that the last time that I spoke was on the tobacco products motion, but that was 12 hours ago. We have experienced a long sitting between then and now. I am sure that you, Mr. Speaker, have returned refreshed and that we do not seem to be too frayed at the edges.
One notable aspect of our debates has been the difficulty in extracting information from the Government. Getting information from the Chief Secretary has been like pulling teeth. I tried to intervene during one of the right hon. and learned Gentleman's earlier speeches, to ask about the cost of the motion under discussion, and he would not even take my intervention.
Only at a late stage did the Chief Secretary give us the figures involved in each motion. The sum concerned in the motion before us is a mere £7 million. In the context of the Budget, it is tuning so fine as to be infinitesimal.
I asked whether the Government proposed a mini-Budget recoupment of the £25 million revenue that will be lost as a result of the changes in the special tax on banking profits announced by the Financial Secretary to the Treasury in Committee on the Finance Bill. The Chief Secretary said that the figure included in the Red Book for the special tax on banking deposits was a guess and that the new guess of £375 million was not much different from the original guess of £400 million, and, therefore, no fine tuning was necessary.
There are so many guesstimates in the Red Book that they make a debate about £7 million absurd. We were not sure whether the fall in the consumption of tobacco will be 15 per cent., as the Treasury estimates—my right hon. and hon. Friends and I predict that it will be more—and there are doubts about the amounts of special petroleum revenue tax and special petroleum duty.
Note (b) to table 2 in the Red Book, which deals with relief for investment in new corporate trade, states:
This estimate is highly uncertain.
Note (i) on capital transfer tax and the limitation of the cumulation period of 10 years states that the cost "cannot be estimated". There is so much uncertainty in all the figures that it is outrageous and ridiculous for us to spend so much time discussing the fine tuning of £7 million.
Figures relating to gaming machines are available from Customs and Excise and, in a more truncated form, in the report of the Gaming Board of Great Britain. Those figures were publicly available, but not until tonight did we hear from the Chief Secretary how the levy was to change for each category of machine.
As my right hon. Friend the Member for Ashton-under-Lyne said, we cannot work out the implications of such fine tuning and whether the lower-rate machines, the amusement machines or the jackpot machines are being penalised. It makes a difference. Action on one type of machine could affect cafes, public houses, arcades and pleasure fairs, and major changes on other machines could affect clubs, particularly working men's clubs. There is not a balance between the increases for jackpot machines and amusement with prizes machines. As my right hon. Friend the Member for Ashton-under-Lyne said, we need time to work out the implications and the balance of where the tax is being increased.
The other factor that makes the whole debate somewhat ridiculous is that the tax on gaming machines was restructured as recently as 1980. The Treasury, Customs and Excise and all the operators are just beginning to become used to a restructured tax, which is now to be changed.

Mr. Golding: My hon. Friend is speaking rather too quickly for those of us who are English and wish to take notes. It would be helpful if he would slow down a little. The points are serious. I have not before heard the point about restructuring. I beg him not to proceed so quickly. We might finish too early.

Mr. Foulkes: I shall certainly slow down. I know that my hon. Friend has problems with my accent. I confess that I have similar problems in reverse. I know that he wants to get the facts right. I apologise, but it is now the usual time for me to get up. I am getting my second or third wind and moving into top gear. I shall slow down.
The Finance Act 1980 provided for a restructuring of the duty on machines with effect from 1 October. The duty on 1p machines was removed. The Government introduced a single lower rate of duty of £20 a year, which they now propose to increase to £25 a year. That rate was introduced only on 1 October, yet they have already proposed an increase. At the same time, they introduced the new low rate of £50 per year, which it is proposed to raise to £75—an increase of 50 per cent. That rate was introduced only in October of last year, but it is now to rise by 50 per cent. There is a peak rate of £300 per year on the jackpot machines. Someone spoke about the North when he meant the North of England. We in Scotland consider that to be the South. The North is near Inverness. My hon. Friends from the North of England are worried about the peak rate on the jackpot machines. It will he increased from £300 to £400—an increase of 33⅓ per cent. Those are dramatic increases.
The report of the Gaming Board for Great Britain mentions the use of the 50p coin. I know that my hon.


Friend the Member for Leigh (Mr. Cunliffe) is interested in that. The report also refers to the small recording microprocessor. My hon. Friend the Member for Workington (Mr. Campbell-Savours) wishes to refer to that. There are devices for keeping an eye on machines. We have all heard about the spy in the cab. This is the spy in the jackpot machine. The interrogator devices would cost about £13 for the simplest one. It would keep an eye on the machine, using the new techniques of the microprocessors. The more complex devices for keeping a close watch on the complicated jackpot machines could cost up to about £500.

Mr. Dennis Skinner: Are they Japanese?

Mr. Foulkes: My hon. Friend raises a good point. If they were British-made, that might provide a stimulus for industry. I suspect that they are Japanese.

Mr. Don Dixon: There is no need for any sophisticated equipment in machines in working men's clubs. Every ½p that goes out or comes in is published in the balance sheet.

Mr. Foulkes: That is right. I do not need to add anything to my hon. Friend's intervention. Apart form the 50p coin and these amazing interrogator devices, the main feature that attracted me in the report of the Gaming Board for Great Britain was contained in paragraph 92 on video games. The report states:
It seemed that opinion within the trade was divided on whether video games would continue to gain popularity or whether interest would start to die away".
Unhappily, my Bill did not get the support of the House, because Conservative Members were aware of the huge sums that were being made by some of their friends by extracting money from young people. Conservatives did not want to take account of my Bill.
The report goes on to say that
although there appeared to be agreement that players tended to seek new and more sophisticated games"—
that is something that I said—
…We heard that some videos went out of fashion soon after they were put out on site and that it was sometimes difficult to recoup the cost of the machines.
I have not heard that. My information is that the machines are proving extremely popular. The report adds:
We for our part"—

Mr. Speaker: Order. The machines may be popular, but we are dealing with duty.

Mr. Foulkes: I am coming to that, Mr. Speaker. If the machines are popular and their numbers increase, they will provide an ideal potential source of revenue for the Government, which they have overlooked.
The hon. Member for Aberdeenshire, East (Mr. McQuarrie) challenged the Government on the increased duty on derv when the House was discussing the Budget. We are here because the Government are not increasing the duty on derv by the amount that they originally intended. Let us not forget that they are still increasing the duty on derv. We are not talking about a reduction of the duty.

Mr. Speaker: Order. We are talking not about derv but about the gaming machine licence duty.

Mr. Foulkes: Are we not discussing the gaming machine licence duty in terms of replacing the increase in duty on derv, Mr. Speaker?

Mr. Speaker: We are discussing whether the duty shall be imposed on gaming machines. The derv issue is for another occasion.

Mr. Foulkes: I shall accept your ruling, Mr. Speaker.

Mr. Harry Cowans: Perhaps my hon. Friend will cast his net rather wider and tell the House what the effect would be if a gaming machine were operated by petrol and were gaining the Government duty on the one hand and receiving it on the other. Will he cast his mind in that direction?

Mr. Foulkes: It is five minutes to 8 o'clock in the morning, and even with my second or third wind I do not think that I could manage to put my mind to that question. If my hon. Friend catches your eye, Mr. Speaker, I am sure that he will be able to elaborate on it.
The hon. Member for Aberdeenshire, East spoke about introducing a tax on space invaders instead of increasing the tax on existing gaming machines. The existing machines are probably taxed to the limit. As some of my hon. Friends have said, we have probably extracted as much money as we can from the existing machines. However, the game of space invaders is ready for the taking. It is estimated that there are about 80,000 space invader machines. If we introduced a tax of £100 on a £400 machine, that would give the Government £8 million.
When I was trying to get my Bill introduced, the hon. Member for Brigg and Scunthorpe (Mr. Brown) challenged me. Unfortunately, Conservative Members opposed the Bill. Since then I have received many letters from people throughout the country who agree with me that we should have some form of licensing and a tag on video machines. The hon. Member for Fulham (Mr. Stevens) said to me in passing the other day that he had been criticised in his local newspaper because he did not support my Ten-Minute Bill.

Mr. Speaker: Order. There are 10 minutes for introducing a Ten-Minute Bill. The hon. Member would be well advised to forget that matter and deal with the gaming machine licence duty.

Mr. Foulkes: I am trying to say that the people who are writing to me, as well as supporting the licensing of space invader machines to control their bad effects, want to license them to bring in revenue—the sort of revenue about which we are talking in the Ways and Means gaming machines licence duty proposals. I am saying that not just jackpot machines but those machines also should be included in the proposals.

Mr. Speaker: Order. That is what the hon. Gentleman cannot do. He could go round the world and choose everything to be included rather than the duty that we are discussing. The House is discussing whether that duty should be imposed. That is the issue that is before the hon. Gentleman.

Mr. Skinner: On a point of order, Mr. Speaker. Earlier today we were discussing raising about £80 million in various forms, which arose from the Government's failure to control their Back Benchers in respect of the derv tax. On a number of occasions we gave the reasons why the Government—not you, Mr. Speaker, nor my hon.


Friends—have gone round the world, so to speak, to find ways and means of raising money under the Ways and Means resolution from—

Mr. Speaker: Order. The hon. Member will raise a point of order, or he must sit down.

Mr. Skinner: I am suggesting that when my hon. Friend speaks, as some others have done, on how the money can be raised, he is right to suggest that there are various other proposals—

Mr. Speaker: Order. It happens that it is not the hon. Member's view that is important in this matter. I have given a ruling that we are discussing the gaming machine licence duty and whether it should be imposed. That is what the House must discuss.

Mr. Foulkes: I accept the ruling, Mr. Speaker. I am looking at the Ways and Means resolution on gaming machine licence duty.
For my aid, I referred to the report of the Gaming Board, which is directly relevant to the matter. Under the heading "Gaming Machines", on page 27, which we are discussing today in regard to licence duty, video games are specifically mentioned. As far as the Gaming Board is concerned, video games come under the category of gaming machines. In their consideration of the increase that should take place, the Government have suggested increases in the existing machines to which duty is applicable. In other words, they have dealt with the jackpot machines and the amusement with prizes machines. The 1p machines have already been exempted from duty. However, they have not dealt with the video machines.
I am not trying to go round the world. Far be it from me on this occasion to go round the world. All that I am doing is referring to the Gaming Board's annual report. I am not even attempting to go into space.
Machines that are classified by the Gaming Board as gaming machines but which are not subjected to tax by the Government in their proposals should be taxed. I have received letters from many people. For example, a gentleman from Bolton wrote to say that he thought that those machines should be subject to licensing and licence duty. He said:
The one machine that I see in my weekly travels has a most unsavoury behaviour pattern in its programme in that, should it suffer a 'defeat', it prints out a line of filthy and obscene expletives.
That was a new one on me. Even with my experience of the machines, I had not discovered that kind. I am sure that you, Mr. Speaker, more than anyone, would want to see such machines curbed. There should be control over and licence duty on such machines.
A letter from Oxfordshire states:
May I draw your attention to the use of these machines in railway station buffets, where, together with one-arm bandits"—
I accept that one-armed bandits are subject to duty—
they are available for use by children. I will not go into the problems that I had in this respect, only to make the point that my local railway staff's only concern was that they had a platform ticket.
That is the only worry that the railway staff had about children using those machines, which are not subject to tax.
I have another letter from a Mr. Cresswell in Streatham attacking the Government for the increase in the number of machines. He says:

This Government of the quick buck will have a lot to answer in the future.
That is right. Week in and week out in the Committee on the Finance Bill the Minister of State said "We need the money".
Where better to go than Finchley, the area that the Prime Minister purports to represent, for support for the need to control and license the machines? Mrs. Dunhill states:
Local residents are most anxious that this centre be stopped.
The letter then asks for information.
There is a great deal of support for curbing the machines.

Mr. Dixon: I do not know whether my hon. Friend is aware of what happened on South Tyneside. A head teacher put a space invader in a school, without the knowledge of the governors. As soon as they heard about it, they instructed the head teacher to get it out. The children were spending their dinner money on the machine.

Mr. Foulkes: I was not aware of that. I shall add the incident to my chronicle.

Mr. Campbell-Savours: There is a danger that the incident on South Tyneside will be related to the Secretary of State for Education and Science, who is eagerly looking for new sources of revenue. Headmasters in various parts of the country object to the pressure on them from education authorities, which are having to raise revenue to cater for school needs as a result of public expenditure cuts.

Mr. Speaker: Order. That is far from the subject under debate.

Mr. Foulkes: I was about to draw my remarks to a close. I am grateful to my hon. Friend the Member for Workington for the additional information.
I am anxious to control access by children to space invader machines. However, where such machines are available to adults they could provide a substantial source of revenue to relieve the burden on other machines that have been milked to the maximum. Working men's clubs are already suffering from the law of diminishing returns.
We now have someone in the Chair who is much more alert than the previous occupiers, so I have probably said as much as I can say.

Mr. Woolmer: I hesitate to introduce a note of dissent, but is not my hon. Friend confusing gaming machines and gambling machines with entertainment machines? Are we not considering a tax on gambling, not an additional tax on entertainment? If he goes along this line, is there not a danger of seeking to provide an entertainment tax on things because of a certain moral objection that he feels about certain issues? In introducing this argument, is he not confusing a tax on gambling with seeking to introduce an additional tax on something that I understand provides not prizes but what might be called entertainment, even if my hon. Friend does not agree with it?

Mr. Foulkes: I understand my hon. Friend's point. I believe that the Gaming Board itself recognises that space invaders and other video games are in a grey area. They are not strictly gambling in terms of there being an opportunity to win a prize if one is, allegedly, lucky. I think that it is a matter of luck rather than skill. I take issue with my hon. Friend the Member for Leigh on that point.


Nevertheless, as I have said, the Gaming Board report classifies these as gaming machines rather than gambling machines, so they may be classified as entertainment. I do not have the opportunity to put forward all the evidence, but if my hon. Friend reads my contribution on the Ten-Minute Bill he will find further evidence on this.

Mr. Woolmer: I recall it well.

Mr. Foulkes: My hon. Friend recalls it well. I hope that he will at least begin to be convinced that there should be some opportunity to raise funds in this way. I certainly suggest that as an alternative to the proposals before us.

Mr. K. J. Woolmer: The motion asks us to accept an increase in duties on gaming machines. I oppose it, in part because of the proposals themselves and in part because of what they represent as part of a whole series of measures put before the House today which will become part of the Finance Bill.
In the last few weeks, the Government have managed to introduce additional tax on cigarettes, matches, lighters, beer, bingo and now on fruit machines and gaming machines. I suggest that we cannot consider this matter in isolation. It is part of a whole series of taxes which inevitably will have and is already having an effect on people's living costs. It has certainly had a real effect in the clubs and pubs around the country.
Whereas we in the House make a great deal of the big decisions of Governments, I know from my conversations with people that it is increases on cigarettes, beer, bingo and now fruit machines that people will notice every time they go out for a little pleasure—and, goodness knows, they need a little pleasure and light relief in the present gloom. As I said earlier, a pub or a club is almost the only place to which people can now go for a bit of pleasure, a bit of light relief from the almost untrammelled gloom of unemployment, rising prices and now falling living standards.
I saw in Tuesday's newspapers that the latest figures indicate that a fall in living standards has started over the past three months, with a decline of 1½ per cent. in that period alone. It is that fall in living standards which is being brought about by the catalogue that I have outlined, and this measure is yet another turn of the screw. Having been voted down on earlier motions relating to cigarettes and bingo, and having lost the votes in the Finance Bill Committee on beer, matches, lighters and so on, we should not complete a sorry tale by letting the motion go through.
In the Committee last year the Minister of State confided that he occasionally erred and strayed, occasionally pulling a handle or pressing a button on one of the machines. It was in a mood of apology that he said that he had transgressed in that way. Some of his hon. Friends asked "Why should we not take more taxes out of working men's clubs? After all, the money only goes to subsidise beer prices." As I said then, if the Government paid as much attention as working men's clubs do to trying to keep beer prices down, they would face a much happier electorate.

Mr. Dixon: The revenue also goes toward retired members' trips, donations to charity, hospitals and so on at Christmas. It is not primarily to subsidise beer prices.

Mr. Woolmer: I was coming to those matters. However, the money helps to keep down beer prices. Passing the motion would result in slightly higher beer prices—halfpence or one penny on a pint. I do not deride the achievement of working men's clubs in keeping down prices.

Mr. Allen McKay: In the clubs that I know, the money also pays for children to go to the seaside. The duty of £400 would pay for a busload of 40 children, who will now be deprived of a visit to the seaside. Because of the Government's policies and the unemployment rate, it might be their only holiday.

Mr. Woolmer: My hon. Friends continue to be a step or two ahead of me. I entirely agree with them, and I shall come to these important points.
When we faced an increase in the duty last year, Conservative Members sneered at the idea that it would reduce the ability of clubs to provide beer that was cheaper than in public houses. That ability is not to be derided. I shall come a little later to the additional benefits provided by clubs.

Mr. Campbell-Savours: My hon. Friend will be disturbed by the knowledge that children's holidays will be snatched. Should we not rephrase the old description "The milk snatcher" to read "Thatcher, Thatcher, the kiddies' holidays snatcher"?

Mr. Woolmer: I shall come to the additional effects on clubs—

Mr. Dixon: I take issue with my hon. Friend's statement that the revenue from the machines subsidises beer prices. I do not know what happens in his neck of the woods, but in the North the beer prices are kept down because the brewery belongs to the workers, and in effect they keep the private breweries' prices down. The revenue from the machines goes primarily to charities, old people's and children's outings and entertainment in the concert room.

Mr. Woolmer: I see that I had better turn to that welcome attribute of the clubs. If I do not, I fear that my hon. Friends will keep drawing my attention to it.
I agree that these areas of activity will also be damaged, because the overwhelming bulk of the money involved goes in that direction. Again, last year—and I suspect that it would have happened again this year if more Conservative Members had bothered to turn up to consider this proposal—there was the objection that the profits from these gaming machines should not be used to provide concerts, outings and so on. However, I and my hon. Friends feel that that is an important function of the clubs. As my hon. Friend the Member for Penistone (Mr. McKay) said, the matter is capable of being brought down to the effects on individual people.
A club is likely to have to pay out, as a result of this impost, probably an additional £200 a year, given the limit of two machines at any time in a club. That will come down to knocking on the head a children's treat or an old persons' treat at Christmas.
There is no escaping this. The Government may want the House to pass this motion and say that it will not hurt anything. I suggest that it will hurt something. If £200 goes, something in the club will go. What goes will be a children's treat or a little help for the old folk at Christmas,


so that, instead of having a couple of pints of beer free, they will no longer be able to have that additional bonus at Christmas time.

Mr. Golding: Has my hon. Friend addressed his mind to the fact that there is so much short-time working at present that the overheads of the clubs have gone up dramatically? With short-time working and unemployment. our constituents have not the money to spend in the clubs. Revenues have fallen fast. The Government are imposing heavy charges. How are clubs to survive, given the squeeze that is being put on them?

Mr. Woolmer: My hon. Friend is right to talk about the ability of clubs—and, I do not doubt, public houses as well—to pay this additional impost. It must be reduced at a time when people's pockets are that much tighter. Again, it is the kind of thing that clearly the Chief Secretary, in his rather slipshod approach to the detail of the motion, has not thought through.
When money is tight, although people may appear to go out as much as before, they must have a drink fewer. They sit around a table that bit longer and cannot afford that extra round, or they have halves instead of pints. It is a hardship to someone who has worked hard all his life to go out without the brass in his pockets to buy a drink.

Mr. Robin F. Cook: My hon. Friend referred to the increased levy paid by a number of clubs with a couple of gaming machines. Perhaps I can help him to put that increase in perspective. I have before me the figure of revenue from the gaming machine duty in 1979–80, which is the last complete financial year for which there are figures. The revenue from gaming machine duty during the last financial year was £13·9 million—just under £14 million.
My hon. Friend will recall that we were assured by the Chief Secretary only an hour ago that the increase from this motion would be £7 million. That is almost 50 per cent. of the total revenue from this duty for the last financial year. That is a significant increase, and I am sure that my hon. Friend will agree that it will mean a sharp increase in the money paid by some clubs and operators of gaming machines. That must have a bearing on the activities to which my other hon. Friends have referred.

Mr. Woolmer: My hon. Friend has made a substantial point. I had been developing the suggestion made by my hon. Friend the Member for Penistone that one could bring this discussion on the tax down to the level of the individual club where, in concrete terms, it would affect kiddies' treats and so on.
In the aggregate, at least £3 million or £4 million will be paid by working men's clubs that would not otherwise be paid. In those terms, that brings home the millions of pounds which, collectively, people put into workers' co-operatives in the form of working men's clubs to provide treats for children and old folk, for concerts, and so on. Though it appears to be an extra £100 on the first gaming machine, when it is put together £3 million or £4 million will be extracted from the clubs.
I suggest that that is unreasonable and not what the House intends. There is the presumption that a tax will come out of someone's pocket and it is reasonable to assume that he can afford it. Who will pay for that? What will be the effect of the tax? Will somebody who is fairly well off now pay something that he can afford to pay? That

will not be the result. The result will be that less money will go into activities of the type that I have outlined. That is my second reason for objecting to the proposal.

Mr. Skinner: Is my hon. Friend aware that the problem goes much deeper than the many examples that he has given to the House and the impact that the tax can have on the income from the machines that provide all the benefits to which he has referred? Much of the money is used for entertainment. Many of these clubs put on big acts of one kind or another. There are bound to be protests from Equity and others who belong to the entertainment profession, who, as a result of the lack of money coming from the machines, will have to scale down their entertainment enterprises.
We return to the old problem, which the Conservatives are very good at stirring up—unemployment. Whereas they have cast their net on the jobs front far and wide, the tax will have a serious effect on the jobs of those in the entertainment business. The clubs will have to go further down the scale and introduce acts that are perhaps not as good as hitherto.
That will reduce the number of people going into the clubs and thereby reduce the turnover for the clubs from the sale of beer and so on. The result will be a descending spiral, resulting in more and more job losses as a result of not having the money available to bring in top-class entertainment.

Mr. Woolmer: That appropriate intervention brings me to the third reason why I oppose the measure. My hon. Friend the Member for Bolsover (Mr. Skinner) has explained clearly that at the end of the day to tax people more means fewer jobs. If clubs have less money to spend, someone along the line does not receive money for doing work of one kind or another. For example, a club may provide a children's treat and it may be argued that much of the labour is voluntary. However, if the money that would be spent on soft drinks, crisps and so on is no longer available, someone somewhere along the line is employed less.
Either immediately or somewhere along the line, we cannot take that money away—in this case the figure is £7 million—without destroying dozens and even hundreds of jobs. A sum of £7 million represents purchasing power. If we assume an average income of £5,000 a year, or £100 a week, we can quickly work out that that means the loss of more than 1,000 jobs as a result of this £7 million reduction.

Mr. Bob Cryer: Does my hon. Friend accept that this additional tax is being imposed at a time when clubs are already facing difficulties? For example, my entry in "Who's Who" is already inaccurate, because my club no longer exists. The Workers Union Social Club (Keighley) has gone out of business because of the financial difficulties that many clubs now face. The problems will now be exacerbated, thus creating the unemployment about which my hon. Friend has been talking. Perhaps he ought to recommend to the Government an alternative tax on their kinds of clubs—perhaps a tax on each dining table for the gentlemen's clubs that they inhabit.

Mr. Woolmer: My hon. Friend reminds me that I should have declared a non-financial interest as a trustee of a Labour club in East Leeds. I have watched with


concern the effects of the recession on that club, whose accounts I know well. I share my hon. Friend's view that it is difficult to believe that the Government could not have found this £7 million by taxing some other activity that is followed by much wealthier people.
The origin of all these measures is the fact that the Government were faced with the loss of the derv revenue. I wonder what induced them to sit down and think about this tax. I am at a loss to understand why. I cannot imagine anyone saying "We must raise £7 million of revenue, and we must pick on working men's and social clubs and children's treats and Christmas treats."
A moment's thought would have told the Government that that was not a fair way of levying this money, which, while small in national terms, is significant for many local communities.

Mr. Dixon: Will my hon. Friend also turn his mind to the point made by my hon. Friend the Member for Keighley (Mr. Cryer)? When a club closes down, the local authority loses the rates on the premises, and that comes on top of the expenditure cuts imposed by the Secretary of State for the Environment, which are affecting social services, housing and every other service at local authority level.

Mr. Woolmer: My hon. Friend is developing the point that if we reduce spending by increasing taxes by £7 million it causes a loss of jobs, a consequence of which is further costs elsewhere in the community. On the one hand, if the enterprise closes down, there is a loss of rate revenue. On the other, if a person is put out of work, that £7 million becomes a false income, because it will be offset by unemployment benefit and the like. We have advanced this argument in many economic debates. We have said that the Government's attempt to reduce their borrowing requirement is often a false economy, because they must pay hundreds of millions of pounds in unemployment benefit and so on.
This mini-debate shows that that is true at the local, small-scale level. An increase of this sort has effects of the kind which, nationally, we deplore in present Government policies. The Government say that they are improving the financial position of the country, whereas in reality, as the months go by, the position is demonstrably getting worse. Instead of reducing the borrowing requirement by reducing taxes, the Government find that as unemployment keeps rising, more benefits have to be paid out, rate income falls, so that rates go up, and they then get into quarrels with local authorities.
I do not want to get drawn into the wider debate but rather wish to show the relevance of these matters to the measure. Have the Government considered why they want to impose this £7 million worth of additional taxation? On the face of it, it would seem either that they have not thought about it or that their social values are not those of the majority of people.

Mr. Golding: I wonder whether my hon. Friend, when he began speaking, realised the seriousness of the position. The interventions have heightened his point about the increasing difficulty being faced by clubs as a direct result of the tax, added to all the other impositions, taken together with short-time working and unemployment.

Surely the Minister must acknowledge that the case seems to get stronger minute by minute and that later this morning it will become almost unanswerable.

Mr. Woolmer: I agree that the interventions have been extremely helpful and have brought home even more clearly the problems being faced in this area of trade. If we were dealing with a local Labour-controlled council putting up the rates, we would be told only too clearly that the local authority was threatening the business life of the community and that it was the final straw that would break the camel's back. Yet here is a measure that will put at least £200 a year on to social and community organisations. If it was the local authority putting it on in the form of a rates rise, there would be uproar. Indeed, there has been not only uproar but threats by the Secretary of State for the Environment that that is sufficient to start changing the constitutional relationship between local authorities and the Government. Clearly there is something that can be regarded as serious, but I should not want to be drawn down the lines of the wider debate. I prefer to stick to the proposal that is before us and the reason why I oppose it.
Before my hon. Friend drew my attention, quite rightly, to the recession, I was expressing my doubts about whether the Government had thought the matter through. The question whether the clubs and pubs can afford the extra tax is relevant. If the economy were booming, and if the brewers were making large profits, I should not object to this kind of tax on gaming machines in public houses. In general, those profits tend to go to the brewers.
That was the interesting fact that came out in the Finance Committee last year. Whereas in working men's clubs and social clubs the burden of the tax will be borne by the members of the clubs, on the whole the additional duty on public houses will tend to be taken away from the brewers. This is an important difference.
I should like to touch briefly on the point made by my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) about the effect of the recession on the ability of clubs to afford the extra burden of £3 million or £4 million.

Mr. Dixon: Will my hon. Friend also mention the fact that it is not unknown for breweries to make contributions to Tory Party funds? The proposal could therefore be counter-productive. Working men's clubs are not always unpopular with Tory candidates at the time of general elections. Many times Tory candidates have requested permission from secretaries to visit clubs.

Mr. Woolmer: My hon. Friend is right. I suspect that the brewers, and perhaps to an even greater extent those in charge of the construction industry, now smile ruefully over the contributions that they made to the Conservative Party at the election. This impost is another turn of the screw and a painful reminder to the brewing industry that the party elected to help it make more profits eats away increasingly at those profits.
The question that I wish to raise is whether it is reasonable to expect organisations that will be liable to pay the additional tax to be able to meet that demand. If brewers were doing well, and if the economy were booming, I should not object too strongly, bearing in mind that there is a big difference between the duty paid in public houses and that paid in clubs. Club machines pay double, and in some cases well over double, the duty paid


in public houses. This gives heightened importance to the position of clubs and social clubs. If the brewers were doing well, I should swallow the first part of the measure.
All hon. Members will, I think, agree that both clubs and public houses are being squeezed. In parts of most towns where the recession has taken hold there is considerable competition for clients. Clubs that manage, by their efficiency and by purchasing from their own federation breweries, to sell beer more cheaply are attracting clients from public houses.
I accept that that is not the situation in every club. As trustee of a club, I have to check the balance sheet to see how the club has fared in comparison with other clubs. It would be an exaggeration to say that some clubs are doing well. However, they manage to keep a fair amount of custom by charging attractive prices. Public houses sometimes object, but clubs, like everyone else, are affected by the recession. This does not mean simply a four-day or even a three-day working week. It can often mean a week on and a week off. Some mills are working only one week in three.
It will be realised that the community that surrounds two or three mills is very close. If one or two major mills are engaged on short-time working, the effect is felt in retail establishments around them. With 25 per cent. male unemployment m Batley, it will be appreciated that some clubs are not making much money.

Mr. Golding: Did I hear my hon. Friend say that he was a trustee of a club? If he is, should he not tell us the name of the club and the impact of the motion on it? Surely we should have some information—

Mr. Speaker: Order. The hon. Member for Batley and Morley (Mr. Woolmer) has told us three times that he is a trustee of a club. We need not go into further details.

Mr. Woolmer: I referred to my interest in the East Leeds Labour club, which is not in my constituency. I joined the club when I was a councillor in the area, and I keep my interest in it. I was drawing on my own experience. I am sure that other hon. Members have similar experience.
Clubs are faced with difficulties when asked to pay additional money. When bar, bingo and draw ticket sales are down, paying such extra sums is difficult. The effect will be felt not by brewers and people who can afford it but by individuals who look forward to the bonus that might brighten up their lives. When one is out of work, it is enjoyable to take one's children on a treat to the seaside.
I wonder whether the Government inquired what the effect would be. My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) asked for details. When the Minister drew up the proposals, he could not have examined the consequences carefully. If he thinks about the consequences, he might reconsider pushing the proposals to a Division. If his purpose was to ask the House to think again, we might have done him a service by asking detailed questions. Perhaps I do the Minister an injustice, but I thought that a piece of paper had arrived mysteriously in front of him.

Mr. Brittan: The hon. Gentleman is mistaken.

Mr. Woolmer: I can see that I did the right hon. and learned Gentleman an injustice, so I withdraw my remark.
There was nothing in the Minister's opening speech to show that he recognised the consequences for clubs and social organisations, which are hard hit already. Some individuals will lose as a result of these proposals.

Mr. Cryer: Will my hon. Friend comment on the likelihood of the Minister's advisers belonging to the Carlton, the Athenaeum or others of the elite group of gentlemen's clubs, as against being members of working men's clubs? Most senior civil servants are members of the Carlton and other such clubs, so that they can mix congenially with Ministers, and they do not have a clue about working men's clubs and, therefore, are not likely to give sensible advice about taxation matters affecting those clubs.

Mr. Woolmer: That is what I was concluding. If the Government had had any contact with the community life with which my hon. Friends and I are regularly in touch, they would appreciate that their proposal is mean, petty and unnecessary. The Government should withdraw the motion, recognise that the sum involved can be lost in the wash and do a service to thousands of youngsters and elderly people who will have the rest of their year spoilt by this mean and petty action.

Several Hon. Members: rose—

Mr. Speaker: Mr. Leon Brittan.

Mr. Brittan: Although the hon. Member for Batley and Morley (Mr. Woolmer) was, at least until his final few sentences—

Mr. Campbell-Savours: On a point of order, Mr. Speaker. It appears that the Government intend to move another early closure. I know that you have been busy most of the night, but other occupants of the Chair will have drawn to your attention the fact that the Government Chief Whip has repeatedly moved premature closures.
Is the fact that the Chief Secretary has been called to speak an indication that our business is to be curtailed and that a motion involving a large sum of public money is not to be fully debated? Only two Back-Bench Labour Members have been given the opportunity to speak in this highly important debate.

Mr. Speaker: The debate on this motion began at 6.49 am.

Mr. Brittan: Although—

Mr. Cunliffe: On a point of order, Mr. Speaker. It was generally recognised that contributions to our debates through the night would come from the Opposition. Some of us have sat here for 14 hours without being called. We were given to understand that if we reached a certain deadline, mutual agreements would be operated. Some of us are distressed by this supernatural technique that has been developed for tax raising. It can be employed when it suits the Government, but we—

Mr. Speaker: Order. That is not a point of order for me. I have not been here through the night, but I have been here since 7.15 am and I have had a chance to study the length of the speeches that have been made. The hon. Gentleman may find in that an explanation why he was not called.

Mr. Campbell-Savours: rose—

Mr. Speaker: Order. The point raised by the hon. Member for Leigh (Mr. Cunliffe) was not a point of order. I was merely acting out of courtesy. If the hon. Member for Workington (Mr. Campbell-Savours) has a point of order relating to our Standing Orders or our rules, I will take it. Otherwise, he would be ill advised to pursue it.

Mr. Campbell-Savours: On a point of order, Mr. Speaker. You said that some hon. Members had prolonged the debate on these motions. Am Ito assume that because some hon. Members have sought to prolong the debate, for whatever reason, other hon. Members are to be prevented from expressing their opinions on an important matter?

Mr. Speaker: The hon. Gentleman knows exactly what happens in the House.

Mr. Brittan: I was about to say that although the hon. Member for Batley and Morley was, until his last few sentences, in an especially seductive mood in suggesting that I should withdraw the motions, and although he showed considerable knowledge, understanding and sympathy for the problems of those who house the machines, I am afraid that, not only because he changed his tone but on the merits of the case, I am unable to accede to his seductive approach.
I can say something that will, I hope, be of some assistance to the House. I recognise, not only by what the hon. Gentleman said but by what many other hon. Members said, that it is well understood that where machines may be popularly categorised in one group, the circumstances in which they are used, their ownership, the extent to which they are used and the degree of profitability vary very much. I had prepared that point to make myself on a defensive basis in case it was suggested—and almost anything can be suggested in the House—that it was a vehicle for taxation that had been inadequately used. I had intended to point out many of the facts that have been raised about the varying usage of the machines. For that very reason we felt it necessary to be careful to avoid hardship by an excessive increase.
Naturally, that must be a matter of judgment. My right hon. and learned Friend the Chancellor has taken the view that the extent of the increases are reasonable. I adhere to that view. As I foreshadowed a moment ago, that is by no means the end of the matter. We recognise the force of some of the points that have been made. Plainly, it would not have been practicable to restructure the duty or to extend its scope overnight. It would not have been possible to give full consideration to the various points made here and others that will be made elsewhere.
We have asked the Commissioners of Customs and Excise to review the whole question of machine taxation, and especially the possibility of introducing an ad valorem form of duty with a view to possible changes in next year's Budget. I am anxious to explain that, as in the other matters that I said are under review, it in no sense implies a decision in any direction but genuinely involves a review in which any interested body, whether through Members of Parliament or by other means, is most certainly welcome to contribute by sending his view to the commissioners. It will be considered.
I can say, I hope without any suggestion of falseness, that the debate that has taken place today will undoubtedly provide useful material for the review. The measures that we are putting before the House are necessary for the

reasons that I have already outlined, but they do not represent a final view on the structure of taxation on machines.

Mr. Robert Sheldon: I want to check that the review will be published and that time will be allowed for comments and criticism to be made before the Government reach a final decision.

Mr. Brittan: There will be time for comments and discussion before a final decision is reached. That is why I have announced the review now. The intention is that any possible changes will be made in the course of next year's Budget. That is the general time scale. I am not undertaking to publish the outcome of the review. I do not wish to commit myself to that. However, if decisions are taken that involve changes—there is no commitment that there should be change—there will be ample opportunity to discuss them in the course of next year's Budget. There will also be ample time for representations to be made and views to be expressed, however far-reaching they may be.

9 am

Mr. Lawrence Cunliffe: I shall try to speak as rapidly as possible, because I am informed that mutual agreement, conventions and reciprocation have been arrived at and will be observed by the members of the hierarchy. We have covered the broad spectrum of tax and fiscal measures that arises from the motion. I know from personal experience and knowledge of many clubs and associations that the measure will have an adverse effect on many such organisations, which will consider the Government to be imposing serious and savage increases in duty.
I do not want to enter into a fiscal statistical slug-out in discussing how revenue should be apportioned. However, many clubs are dependent entirely upon the massive source of revenue that fruit machines, one-armed bandits and space invaders provide. That applies to many voluntary sporting associations. For example, many cricket associations are training cricketers. They are able to do so because of the funds that they derive from one-armed bandits and fruit machines. The Rugby Union is another classic example. Many of the rugby clubs would never be viable without this source of revenue. They do a worthwhile and creative job.
Some hon. Members have referred to the various charitable institutions that benefit from revenue gained from fruit machines, one-armed bandits and space invaders. I shall give some classic examples from the North-West. The Atherton Labour club in my constituency provides entertainment for 150 disabled people from all parts of the metropolitan area. It does so on a non-political basis. The disabled are brought to the club by bus and they are entertained throughout the evening by various types of artistes, varying from brass bands to cabaret. That is done every Thursday. Conservative friends help at the club, in the volunteer section, to look after the disabled.
There are examples of club associations that provide hospitals with free beds every year. Beds are donated by the various clubs in the area and they are presented to the area health authority. Such activity subsidises State finances to a degree. The State would have to provide the finances if the voluntary service were not forthcoming.
I am afraid that the Government's proposals will have an adverse effect on the examples that I have given of club


and association activity. Many of the clubs and associations have had to bear savage rate increases. They have had to try to absorb increased energy costs. The general recession has caused consumer spending to decline within the clubs. We heard that 85 per cent. of bingo players are women. With regard to fruit machines, space invader machines, and so on, we are finding that the ratio is 60 to 40 male-dominated. Therefore, it is a different ball game and a different kettle of fish.
Different ways of trying to find different tax measures to cover the problem generally have been mentioned. Most of the fruit machines operate on a commission basis. The percentage is paid from the takings on the machine. As the licences increase, as is bound to happen, one can lay Chester Cup odds that the clubs and associations will have to bear the brunt of the increase.
We have talked about various manias. We have moved from bingo mania to betting manias. We started with Beatlemania, but more bingo cards are being sold today than the number of Beatles records that were produced.
The Minister referred to alternative sources of revenue, which was interesting. One Conservative Member talked about doubling bob-a-job week to bring in tax revenue, create jobs and produce alternative sources of revenue. The Conservatives have a supernatural instinct for producing fiscal and tax measures that were not dreamt of by any British Government or are unprecedented. That is their business.

Mr. Austin Mitchell: They are desperate.

Mr. Cunliffe: That is right. We saw the hole-in-the-corner tactic tonight when the Minister introduced certain measures that had not been revealed to any hon. Member. such a hole-in-the-corner method and tactic makes a mockery of the debate. We cannot make a rational and sensible judgment of the effects of such a thing. Nevertheless, that is considered to be a fair political tactic. There is no doubt that the majority party is top of the pops in dreaming up such schemes. At the end of the day, working-class people and the ordinary people have to pay out their hard-earned cash for the Government. Dispensations are granted for gambling casinos, on the basis of tourism. I know what is best for the nation. We produce athletes, cricketers, rugby union players, footballers and even orators from our political institutions. That is the best form of investment that we can make.
We have dealt with how we should help people to make up their minds. The nation will know that the promised tax cuts were artificial. Many of the young people and those predominant in the bingo circle voted for such tax cuts, little dreaming that there would be a reverse in a short period. The chickens are now coming home to roost. The Conservative Party is known not only as the party of unemployment but as the arch tax manipulator and the architect of being thoroughly professional in that occupation. I am afraid that on the next occasion the women in the bingo halls and the young people who expected tax cuts and jobs will not forget the Government's policy. [Interruption.]

Mr. Speaker: Order. I have been patient with the hon. Gentleman.

Mr. Cunliffe: The whole wretched affair—the duty being imposed—is a reprisal for a rebellion on the Government Benches. I know that we are not debating

derv. However, I find all the measures utterly squalid, second-rate and unbecoming for anyone with honest political integrity. We are prepared to talk for another 20 hours. The capital gains tax lobby rightly engineered our opposition. We support that lobby through and through.

The Parliamentary Secretary to the Treasury (Mr. Michael Jopling): rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly:—

The House divided: Ayes 97, Noes 30.

Division No. 253]
[9.10 am


AYES


Alexander, Richard
Marshall, Michael (Arundel)


Ancram, Michael
Maude, Rt Hon Sir Angus


Baker, Nicholas (N Dorset)
Mawby, Ray


Banks, Robert
Maxwell-Hyslop, Robin


Beaumont-Dark, Anthony
Mellor, David


Benyon, W. (Buckingham)
Miller, Hal (B'grove)


Berry, Hon Anthony
Mills, Iain (Meriden)


Biggs-Davison, John
Moate, Roger


Blackburn, John
Morgan, Geraint


Boscawen, Hon Robert
Neale, Gerrard


Boyson, Dr Rhodes
Neubert, Michael


Braine, Sir Bernard
Newton, Tony


Bright, Graham
Onslow, Cranley


Brinton, Tim
Osborn, John


Brittan, Leon
Page, John (Harrow, West)


Brooke, Hon Peter
Page, Richard (SW Herts)


Brown, Michael(Brigg &amp; Sc'n)
Pattie, Geoffrey


Browne, John (Winchester)
Proctor, K. Harvey


Butcher, John
Rees, Peter (Dover and Deal)


Carlisle, John (Luton West)
Renton, Tim


Carlisle, Kenneth (Lincoln)
Roberts, M. (Cardiff NW)


Clark, Hon A. (Plym'th, S'n)
Roberts, Wyn (Conway)


Clarke, Kenneth (Rushcliffe)
Sainsbury, Hon Timothy


Cope, John
Shaw, Giles (Pudsey)


Cranborne, Viscount
Silvester, Fred


Dover, Denshore
Skeet, T. H. H.


Dunn, Robert (Dartford)
Speed, Keith


Fairgrieve, Russell
Speller, Tony


Faith, Mrs Sheila
Spicer, Jim (West Dorset)


Fell, Anthony
Stainton, Keith


Fenner, Mrs Peggy
Stanbrook, Ivor


Fookes, Miss Janet
Stevens, Martin


Gardiner, George (Reigate)
Stradling Thomas, J.


Griffiths, E.(B'y St. Edm'ds)
Taylor, Teddy (S'end E)


Griffiths, Peter Portsm'th N)
Thomas, Rt Hon Peter


Grist, Ian
Thorne, Neil (Ilford South)


Gummer, John Selwyn
Trippier, David


Hamilton, Hon A.
Viggers, Peter


Hawkins, Paul
Waddington, David


Hawksley, Warren
Wakeham, John


Heddle, John
Watson, John


Henderson, Barry
Wells, Bowen


Jopling, Rt Hon Michael
Wheeler, John


Lang, Ian
Wickenden, Keith


Le Marchant, Spencer
Williams, D.(Montgomery)


Lester, Jim (Beeston)
Wolfson, Mark


Lyell, Nicholas



Macfarlane, Neil
Tellers for the Ayes:


MacGregor, John
Mr. Donald Thompson and


Major, John
Mr. Alastair Goodlad.


Marlow, Tony





NOES


Campbell-Savours, Dale
Foot, Rt Hon Michael


Cocks, Rt Hon M. (B'stol S)
Foulkes, George


Cowans, Harry
George, Bruce


Craigen, J. M.
Golding, John


Cryer, Bob
Hamilton, James (Bothwell)


Cunliffe, Lawrence
Hardy, Peter


Cunningham, Dr J. (W'h'n)
Harrison, Rt Hon Walter


Dixon, Donald
McKay, Allen (Penistone)


English, Michael
Mitchell, Austin (Grimsby)






Morris, Rt Hon C. (O'shaw)
Tinn, James


Morton, George
Wainwright, R.(Colne V)


Powell, Raymond (Ogmore)
Welsh, Michael


Prescott, John
Woolmer, Kenneth


Robertson, George



Robinson, G. (Coventry NW)
Tellers for the Noes:


Sheldon, Rt Hon R.
Mr. Joseph Dean and


Skinner, Dennis
Mr. Frank Haines.

Question accordingly agreed to.

Resolved,
That increases shall be made in the rates of gaming machine licence duty chargeable under section 21 of the Betting and Gaming Duties Act 1972 and Part V of the Miscellaneous Transferred Excise Duties Act (Northern Ireland) 1972.

Orders of the Day — DEEP SEA MINING (TEMPORARY PROVISIONS) BILL [Lords]

Order for consideration, as amended, read.

To be considered tomorrow.

PUBLIC ACCOUNTS

Ordered,
That the Standing Order of 4 July 1979 relating to the nomination of the Committee of Public Accounts be amended, by adding Mr. Ray Whitney.—[Mr. John Stradling Thomas.]

Orders of the Day — West Indian Children (Rampton Report)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Gummer]

Mr. Tom Ellis: I am grateful for the opportunity to discuss the Rampton committee's interim report, "West Indian children in our schools," although in the short time available I can hardly do justice to the importance of the subject, the quality of the report or even the extraordinary intervention of the Secretary of State for Education and Science in the committee's work.
There is no need for me to justify the report's importance now that we have the shocking examples of Bristol, Brixton, Southall and Toxteth demonstrating some of the extreme consequences of a conflict of cultures. The problems of racial minorities in our society are grave and urgent. Clearly, the education of such minorities must be a major concern of the Government and all our citizens.
Anthony Rampton's committee was set up to perform an extremely difficult task. It is now clear that that task has become even more difficult as a consequence of the Secretary of State's intervention and of the manifest prejudices—both his own and his Department's—that his intervention reflects.
Mr. Rampton, who has an outstanding reputation and record of achievement in race relations, while being a successful and hard-headed business man, employing many black people, was appointed by a Labour Secretary of State to chair a committee chosen a few months later partly by that Minister and partly by an incoming Conservative Government. His committee contained political appointees of differing colours, together with representatives of the ethnic minorities. They were charged with finding why West Indian children were doing badly at school and with finding ways quickly to put matters right without extra expenditure by the Government.
The membership of the committee and its terms of reference were announced at the end of July 1979, so it was able to begin work in the early autumn of that year. The committee submitted a unanimous interim report to the DES, with about 80 recommendations for action, on 27 February this year. About 20 of the recommendations were addressed solely to the Department, which is in a position, if it wishes, to take action at least on those. That was a remarkable achievement, which is greatly to the credit of the committee and its chairman, especially as the initial reaction to the committee on the part of ethnic minority groups was hostile. Indeed, it was due largely to the individual efforts of Mr. Rampton that submissions of evidence eventually came in and that his committee established a degree of credibility with the ethnic minority
A typical and fair comment made after the official publication of the report is this one from The Economist of 20 June:
The whole subject"—
that is, the poor educational attainment of West Indian children—
is embarrassing. To discuss it frankly is useful. To produce an agreed report on it, from an official committee of all races and practically all political views, is a considerable achievement.
But the initial reaction of the press was much more disparaging, and it is worth while looking at that reaction. It is important to bear in mind that, although the report was sent to the Department in February, it was not published until 17 June after an inexplicable delay of nearly four months at the hands of the DES.
The House will recall the report of the Select Committee on Race Relations and Immigration of 17 February 1977. This report called for
a high-level and independent inquiry into the causes of underachievement of children of West Indian origin.
As I said, the membership and terms of reference of the
Rampton committee were finally announced in July 1979, and the Government called for an interim report.
One assumes that the situation had been known to be urgent at least since 1977 and that it was this urgency which led to the request for an interim report, a request admirably met in a little over 12 months with a number of recommendations for action which could be taken without great expenditure by the Department.
The first indication that all was not well came with the extensive leaking of the report several weeks after it had been sent to the DES and significantly, I believe, after the Brixton riots. Whether the report would have been published if there had been no Brixton is an intriguing question.
As I said, the initial press reaction was heavily slanted against the report in the crudest way. There was nothing restrained or sensitive about the press leaks and the inspired criticism of the report. They were remarkably in character with a Government who pride themselves on their dry abrasiveness.
The criticisms were that the chairman of the committee lacked intellectual bite, that the committee was hopelessly divided, that its meetings were a shambles and that the chairman was too weak to impose discipline or his
members. Even worse, there were reports of
fudging fundamental issues such as the relationship, if any"—
how grateful we must be for the "if any"—
between intelligence and race and the effect of a child's home and cultural background on his educational development.
Incredibly, the committee was criticised for assuming that West Indian children in any case could reach normal levels of achievement. This is what The Times education correspondent said about the committee before the report had been published:
And they"—
that is, the committee—
should not have assumed so easily that the low achievement of West Indian pupils necessarily equalled underachievement, as they had gathered no firm statistical evidence to prove that West Indians are in fact performing at a level below their capabilities.
If ever a comment was inspired by the bureaucratic insight that people are guilty until they are proved innocent, it is that one.
Two members of the committee nailed this canard in a letter to The Guardian a few days after the report had been published—a letter, incidentally, which tells us something of the difficulties that the chairman had overcome. The letter was addressed to the editor of The Guardian and said:
While recognising this, you go on to talk about a fear, at least among some members of the Rampton Committee, of the racialist theories of genetic inferiority. No one"—
I ought to add the word "sic" there, because that is what is in the letter—
on the committee had such a fear, for there is enough evidence to show that no such inferiority exists. The West Indian children


in the West Indies achieve impressive results in their school leaving examinations. As we show, some West Indian children in British schools too achieve good results, and their performance improves as a result of supplementary education. All this puts paid to any notion of genetic inferiority, and indicates beyond a shadow of doubt that the West Indian under-achievement must be explained in other terms, some of which the Report stresses.
In due course, the report was at last published, four months after it had been with the Minister and after Brixton. The level of debate on the report improved and commentators began to show a more mature appreciation of the true worth of the Rampton committee's achievement. The educational correspondent of The Observer succinctly described the issue:
Talking to members of the Committee last week, however, it became clear that a more rigorous approach would have split this multi-racial, all-party committee. Such rigour would demand the close examination of two hypotheses. One—to which the Report leans—is that our whole education system and society are hugely biased against disadvantaged young people in general and black people in particular. The other, as one member put it, is 'that, by and large, blacks are thicker'. The first view is not acceptable to the Government and some of its appointees on the Committee. The second is wholly unacceptable to everyone.
In the light of that statement of the options, put with all the intellectual clarity and succinctness one could wish for and in the light of Bristol, Brixton, Southall and Toxteth, the DES for its part should be showing with some urgency not merely a departmental concern but some political understanding and sensitivity. The Department must have enough intellectual bite to grasp that intellectual rigour, especially when it is invoked to pander to prejudice, is not incomparably of the stuff of politics in the way that compromises and occasionally necessary inconsistencies are.
That is why one wishes desperately that there were a politician at the head of the Department of Education and Science. He is clearly needed there. Perhaps one might be allowed, appropriately in the present context, to quote as a homily to the Department and its Ministers from a review by Sir P. B. Medawar, a sufficiently distinguished intellectual, I trust. The quotation is contained in a book entitled "The Politics of IQ". Sir Peter says:
If a broad line of demarcation is drawn between the natural sciences and what can only be described as the unnatural sciences, it will at once be recognised as a distinguishing mark of the latter, that their practitioners try most painstakingly to imitate what they believe—quite wrongly alas, for them—to be the distinctive manners and observances of the natural sciences. Among these are the belief that measurement and numeration are intrisically praiseworthy activities, the worship, indeed of what Ernest Gombrich calls idola quantitatis and their belief in the efficacy of statistical formulas.
Politics is a natural science. We are not dealing, as this overwhelmingly mechanistic Government appear to believe, in a straightforward and shallow positivism. The causality, so dear to the heart of the Secretary of State and his Department, is a spurious causality which is quite inadequate for complex and emotional race relations, an area in which democratic Governments must, thank goodness, allow for the wilfulness of men.
I have a few minutes remaining in which to sound a word of warning to the Minister and through him to the Government. I shall address three or four pertinent questions to him in the hope that something might be rescued from the debacle his Department has engineered about the Rampton-Swann committee.
What is coming across, not only to ethnic minorities but to all of us who are concerned with social harmony, are

the Prime Minister's crass comments on Brixton, the British Nationality Bill, the long delay by the DES in publishing the interim Rampton report, the callow press leaks about the committee and its chairman, the discourtesy, let alone the disingenuousness, of not including the chairman's covering letter with the published report, his perplexing departure and the resignation of some committee members and the threatened resignation of others in protest. Incidentally, all except two or three members strongly supported their chairman. There was also the appointment of new members to apply their intellectual bite with rigour and vigour. Now there is some woolly talk from the Secretary of State about further consultations before implementing any of the report's
recommendations.
Credibility, that all-important quality of any committee of inquiry, especially this one, has been severely strained. It must be the task of us all to try to repair the damage. It is with that in mind that I should like to ask the Minister several questions which I hope he will try to answer.
First, what action is now being taken by the Government? They called for an interim report as a matter of urgency. They now have it. But they are using the singling out of West Indian children as a reason for not acting. In answer to a written question, the Secretary of State said that he would
consult widely on the report's implications
and emphasised that he was looking forward
to receiving in 1983 the Committee's main report on the … needs.…of children from all ethnic groups."—[Official Report, 17 June 1981; Vol. 6, c. 363.]
It is clear that West Indian children are to have less attention devoted to them in the main report than Asian children.
What consultations has the Minister already embarked upon? Which minority groups and other institutions has he written to? What is the date by which responses have been sought? Why is it necessary to consult at all about the recommendations addressed solely to his Department? If the ethnic minorities are to have any confidence in the Government, and if the future work of the committee is not to be undermined, Government action is needed now.
What is the Minister's reaction to some of the recommendations? What about the proposals to keep proper statistics about race in the education system? Only two authorities now keep such statistics. What is the Minister's view on that? What about the recommendation on the use of funds under section 11 of the 1966 Local Government Act being monitored by black and Asian communities? What about the
failure of teacher training institutions to prepare teachers for their role in a multi-racial society"?
The section of the report on initial training was anything but woolly, as some of the early critics maintained. What will the Minister do about that? Can he estimate the costs that will be incurred in implementing those recommendations addressed to his Department? Does he know that a favourable response to the report is coming through from many teachers' organisations now that a considered assessment has been possible?
According to Friday's Birmingham Post, recommendations have been made by three teachers' organisations for the appointment of staff with the responsibility for multicultural education, for the recognition of Creole and for the inclusion of Asian language classes in the mainstream of school curricula. Above all, does the Secretary of State know, as The Economist puts it, that by his rudeness to Mr.


Rampton, he has struck a blow against good race relations? Will he now try to make amends by taking the interim report seriously and acting on its recommendations?

The Under-Secretary of State for Education and Science (Dr. Rhodes Boyson): I am grateful to the hon. Member for Wrexham (Mr. Ellis) for raising this subject. However, many of his comments will not have helped the smooth relationships in which he apparently believes.
The last two schools of which I was head had large racial minorities. The first had a large racial minority of Indians, and the second of West Indians—about 20 per cent. I have checked with that school, and it certainly has not been under-achieving with many of the West Indians. Many of them went up to university and were house captains. In addition, I have a large immigrant population in my constituency. Indeed, there is a school there with a majority of immigrants. I have visited it and appreciate the work that it has done.
The hon. Gentleman was somewhat uncharitable in his remarks on timing, and the record ought to be put straight. The recommendation that there should be such an inquiry was made by the Select Committee on Race Relations and Immigration in 1977, and the Labour Government, of whom he was a supporter—I do not want to do a "Rhubarb, rhubarb" this morning but to lift the debate to a better plane—took two years to set it up. So no delay on our part has been equivalent to that of the Labour Government on this matter.
From the time we came into office we put the plan into action. It was started by the Labour Government and I pay tribute to them for that. On 1 March the Secretary of State received the report. He announced on 1 May that it would be published and on 17 June it was published. Although I have no facts and figures with me this morning as to how long it has taken to publish other reports, it was only three and a half months from the time of arrival to publication. I should like to examine at some time with the hon. Gentleman the time taken to publish other reports, because I should be very surprised if they were published at a speed far in excess of this one.
I should like now to deal with about three points raised by the hon. Gentleman—that is all I shall have time for this morning. Let me first pay tribute to the work that was done by the committee under Mr. Rampton and to the work that will be done by the committee under Lord Swann. It is particularly important that we pay that tribute, that we build on what exists, and that we build up the relationship if the report is to be used to advantage. We thank those who have worked before and we thank those who are still working, and we look forward to the later report that we shall have from them.
The issues which the committee has had to handle are complex and sensitive. I am aware of how sensitive they are and I am sure that the hon. Gentleman is as well. Its former chairman, Mr. Rampton, and all its members, as I have said already, have put in a great deal of hard work, and we are indebted to them for all their efforts. The Government would not have followed through the plans of their predecessors for such an inquiry had they not shared the concern of others about the needs and achievements of ethnic minority children in general. We did not expect that the committee's task would be straightforward, nor has it been.
The committee has pointed to a number of possible causes for low achievement among West Indian pupils—I hope that I shall have time to deal with some of them—and to various measures that might be taken by the education service to counteract their effects. The Government will consider the committee's recommendations very carefully, in the light of all the comments which may now be made by interested bodies.
We believe that consultation is vital. The Government cannot proceed on their own in this matter. We do not proceed by diktat. If there is to be a full understanding of all the issues, and if we are to proceed in practical ways rather than on the basis of theory, a wide range of views must be sought. The committee itself foresees this in its report; it envisages discussion and welcomes comments on its findings. The hon. Gentleman and I must have seen them when we read the report.
Given the nature of the education system in this country, there must be a large measure of agreement between local authorities and the teaching profession, between teacher training institutions, schools and colleges, about aims and what needs to be done to attain them. It is usually easier to reach agreement on the former than on the latter. Let me take one example that the hon. Gentleman quite rightly mentioned this morning.
The committee is clear—the hon. Gentleman asked what we are doing about it—that the Department of Education and Science should collect statistical information on the ethnic origins of pupils in schools and should also make use of ethnic classifications in the national statistics relating to teacher training, to other forms of higher and further education, and to teachers in employment. The hon. Gentleman referred to two authorities that collect those statistics. It is the committee's belief that ethnically based statistics would be of value at all levels and to all parties within education. But we all know—and certainly Ministers in the Department know—from the experience over the proposed ethnic origin question in the 1981 census, and from the reaction to a DES proposal to assess the performance of a sample of West Indian pupils, that the issue is an extremely sensitive one. If we drive on with this without taking people's feelings into consideration, more harm than good can result. Much opposition comes from the minority communities themselves.
The committee has recognised that it would be wrong for the Government to take any initiative on this front without first consulting the local authority associations, the teachers' associations, the Society of Education Officers and representatives of ethnic minority communities. I know through contacts in the Department with the teachers' unions that many of them feel strongly opposed to the collecting of specific ethnic statistics. I know what the report says. If, however, the Government went ahead, I do not believe that we would obtain the co-operation of those in the classroom. Without that co-operation, more harm than good is likely to be caused. One needs co-operative teachers within the classroom. This indicates how delicate and sensitive is an issue in which many of us in the Department have been involved through consultations over the past three or four months.
Two issues have dominated public reaction to the report. One is the question whether the committee has succeeded in demonstrating that West Indians as a group are under-achieving in the maintained education system. The hon. Gentleman referred to this matter. The other is


the suggestion that society in general and teachers in particular treat West Indian children differently. I know that the committee was well aware of the need for further work to be done on the subject of achievement and that it was working within a tight timetable. I know, too, that it is anxious to commission further research and other work to inform its further report. Certainly, the evidence that has been assembled must be a cause for concern and I am sure that the findings will be much discussed.
I note with interest that the committee intends in its main report to look at the circumstances associated with West Indian pupils who have enjoyed academic success. Such information could be valuable in identifying what is missing for those who have been less successful. This is most important. If we can identify schools and areas where West Indian children are succeeding and can find the formula and transfer it, I believe that this is what is required. It was my belief as a headmaster, and still remains my belief, that to water growing plants is better than to keep digging things up. When one sees something growing, one encourages development. We want research carried out and visits made to enable similar success to be achieved in other schools and areas.
If West Indian children as a group are failing to achieve their educational potential, many people will wish to know why Asian children as a group appear from the evidence available to be close to white children in their achievements and well ahead of West Indian children. The hon. Gentleman knows, as I well know, the difficulties that are involved. Among school leavers, 18 per cent. of the Asian 16-year-olds obtain five O-levels or more compared with 16 per cent. of all leavers but only 3 per cent. of West Indians succeed in obtaining that number. This shows the magnitude of the problem.
I am not commenting on class structure, where the pupils live or whether their families are Labour or Tory voters. I was merely giving the statistics that have to be interpreted. The statistics show that six times as many Asian community pupils gain five O-levels as the West Indian community. This shows the seriousness of the problem. Again, the statistics show that 13 per cent. of 18-year-old Asian school leavers gain one A-level, compared with 12 per cent. of all leavers and 2 per cent. of West Indians. One asks what needs to be done about this serious problem.
This is a big issue and a big report. It may be said that teacher training holds the key. The Department and Her Majesty's inspectorate take every opportunity to encourage consideration by the training institutions of the best way to ensure that students are adequately prepared for teaching in today's society. At present, about half of

all initial training institutions appear to be offering relevant studies, and the fact that many are reviewing the content of their courses offers an opportunity for further development of their work.
The Government have taken up the initiative inherited from the Labour Government—this is mostly a search for what should be done, involving all parties—in encouraging certain local education authorities to establish special preparatory courses aimed particularly at students from ethnic minorities to enable them to reach the standard necessary for entry to training courses for teaching, social work or general higher education. These courses are now in operation in certain areas and will be monitored. I should add that we are carrying out monitoring. We have commissioned a new project which will seek to indentify the factors associated with success in multi-ethnic secondary schools, and that line of inquiry should be well developed with the projects we have commissioned. We have commissioned that report with urgency to assess what the successful schools are doing and how we can transfer that success to other schools.
The hon. Gentleman referred to section 11 of the Local Government Act 1966. Under that section, grant aid is paid to local authorities in respect of special provision relating to Commonwealth immigrants. This may be claimed not only for specialist language teachers but also for a wide range of relevant posts such as multi-cultural advisers or home-school liaison personnel. Let me list some of the work done. The most recent phase of the urban programme—phase 21—includes approval for five educational projects aimed at West Indian communities, and one of those is a £90,000 project to help rehouse a West Indian youth and community club in Reading.
Unfortunately, time for the debate is running out. It is a pity that we did not have longer, with more hon. Members present, to debate this important subject. I began by saying that this is a most important report. It is important that all of us should co-operate wherever we can in picking out the growth areas and putting the results into action elsewhere.
If we are to be one community in Britain, with various habits and arrangements within our society, but all feeling part of the whole, it is vital that the West Indian, the Asian and all other communities should enjoy success in our education system so that they can enjoy the success and confidence which comes from it. We are looking very carefully at all the other points that have been raised by the report. We shall make provision where we can; we shall make the fullest progress that we can.

Question put and agreed to.

Adjourned accordingly at nine minutes to Ten o'clock am.